EPFO’s new withdrawal rules simplified!:Labour Minister Mandaviya clarifies PF subscriber free to withdraw 75% balance immediately on unemployment, no need to wait for 12 months

The retirement fund body, the Employees Provident Fund Organisation (EPFO)’s governing body, the Central Board of Trustees’ (CBT) decision to hike the period of minimum continuous unemployment to 12 months from 2 months as a condition to become eligible for withdrawal of funds from the PF account has drawn major backlash from the citizens and opposition political parties. This had created panic among the EPF subscribers as to what would happen with them during the tough time when they would be fired from their job and they would not be allowed to withdraw PF funds for straight 12 months Addressing all these concerns, the Union Labour Minister Mansukh Mandaviya has come out with clarification on this matter and put to rest all the confusions and apprehensions arising out of the confusions. What labour minister said on the condition of 12-month mandatory continuous unemployment period for withdrawal of PF funds? Earlier, the GoI’s PIB release on the new rules was widely interpreted to be meant that the PF member was now required to have mandatorily undergone 12 months of continuous unemployment period to become eligible for withdrawal of funds from the PF account. But the labour minister clarified that the new rules stated that the subscriber was free to pullout 75% of his PF balance even if he was unemployed for one day and the remaining 25% he could withdraw if he sat unemployed for the full 12 months period. Why govt made it mandatory for PF subscribers to maintain 25% minimum balance? Mandaviya said that the government decided to make it mandatory for the PM member to maintain the minimum 25% balance in his account for 1 year so that in the EPFO’s records, it can be considered that he has continued his service for 10 years and becomes eligible for pension under the EPS-95 scheme. So, the rule of 25% minimum balance has been brought in to ensure that members get qualified for the pension to be disbursed under the EPS-95. Why govt extended minimum continuous unemployment period from 2 months to 12 months to become eligible for withdrawal of 100% funds from his PF A/C? According to Mandaviya, the reason behind the government’s decision to extend the requirement of minimum continuous unemployment period from two months to 12 months was that what used to happen earlier was that if after two months, the subscriber got a new job after being unemployed for three months, but, during this lean patch, just after the two months were over he used to withdraw all the money from his PF account, then, in EPFO’s records, his service period would not be considered as a continuous one. Many times it was seen that he was able to secure a new job only after three months but he pulled out all of his money from the account after sitting unemployed for initial two months. So, after within this two months his entire PF balance became zero. After that if he got the job in the third month. Then, he continued service in the new organisation for a total of seven months, thereafter. The contribution was made by him and his new employer in his PF account in the PF account with his new organisation for these seven months. Mandaviya said extension of minimum continuous unemployment period to 12 months would give the subscriber more time to look for new job and when he gets one he would be able to maintain job continuity.