Union Labour Minister Mansukh Mandaviya announced on Tuesday that subscribers of the Employees’ Provident Fund Organisation (EPFO) can now withdraw up to ₹1 lakh at once from their accounts for personal needs.
This is an increase from the previous limit of ₹50,000, as reported by Hindustan Times.
The labor ministry has made various updates to EPFO operations, including a new digital framework and guidelines to improve flexibility and responsiveness.
This aims to reduce inconveniences for subscribers.
Additionally, new employees who have not completed six months at their current job can now withdraw funds, a change from the previous rule.
Meeting Financial Needs
“People often rely on their EPFO savings for expenses like weddings and medical treatments.
We have increased the withdrawal limit to ₹1 lakh at a time,” Mandaviya stated during the government’s 100 days in office.
The increase in the withdrawal limit addresses the outdated previous cap, considering changing spending needs.
Provident funds provide retirement income for over 10 million organized sector employees, often serving as their primary source of savings.
The EPFO’s interest rate for FY24 is set at 8.25%, a key benchmark for many salaried individuals.
Transitioning to EPFO
In another major update, the government will allow organizations not currently part of the EPFO to switch to the state-run retirement fund manager.
Some businesses have their own private retirement schemes due to exemptions because their funds were established before the EPFO was created in 1954.
“There are 17 such companies with around 100,000 employees and a total fund of ₹1,000 crore. If they choose to switch to EPFO, they will be permitted.
The government’s PF savings offer better and more stable returns,” the minister added.
Future Plans for Provident Fund Contributions
The minister also shared plans to raise the income threshold for mandatory provident fund contributions from ₹15,000 for salaried employees.
Additionally, the threshold for Employees’ State Insurance, currently at ₹21,000, will also be increased.
Employees earning over ₹15,000 will have the flexibility to choose how much of their income they wish to allocate for retirement benefits and pensions.
Under the Employees’ Provident Funds and Miscellaneous Provisions Act of 1952, companies with 20 or more employees must contribute to provident funds,
with a mandatory deduction of at least 12% of an employee’s salary, matched by the employer’s contribution.
