Last Updated: February 10, 2023, 15:15 IST
EPF savings create a corpus and also offer pension to the employees after their retirement.
Individuals are not allowed to make full withdrawals of their EPF balance while transitioning between their old and new employer
EPF savings create a corpus and also offer pension to the employees after their retirement. Partial withdrawal from EPF is allowed only under certain conditions. Employees’ Provident Fund (EPF), commonly known as Provident Fund, is a savings scheme to create a retirement corpus for employees in the private sector.
As the existing EPF norms any company or organisation employing more than 20 workers must register with the Employees’ Provident Fund Organisation (EPFO). All the employees drawing the salary are eligible to enroll under the EPF scheme.
EPF savings create a corpus and also offer pension to the employees after their retirement. The EPFO, one of the world’s largest social security organisations, is a statutory body created to provide financial security to employees in the private sector after their retirement.
After retirement, the corpus of this fund will be available to the employees for withdrawal. Employees are required to contribute 12% of their basic towards EPF and an equal amount is contributed by the employer.
Withdrawal of the EPF can be done either partially or fully as per the defined criteria. EPF can be withdrawn entirely only under two circumstances. The first criterion is when an employee retires. Secondly, if an individual remains unemployed for over one month 75% of the accumulated PF amount can be withdrawn. The remaining 25 per cent can be withdrawn if the individual’s unemployment duration exceeds two months.
Individuals are not allowed to make full withdrawals of their EPF balance while transitioning between their old and new employer.
Partial withdrawal of EPF balance can be made only under the following conditions:
Withdrawal in part before retirement:
Up to 90% of the accrued sum with interest may be withdrawn one year before retirement, but the employee must be 55 years old or above.
Medical needs:
Without having to fulfill any service requirements, an employee may partially withdraw up to six times their basic pay and DA, or their whole employee share plus interest, for their medical needs.
Purchase of land or purchase/construction of a house:
With a minimum of five years of employment, withdrawal amounts of up to 24 times the basic monthly pay and DA are permitted for the purchase of land and up to 36 times the basic monthly salary plus dearness allowance are permitted for the purchase of a home.
Marriage and Education:
After at least seven years of service, an employee may take up to 50% of their share of the EPF contributions for their marriage, the marriage of their children, or the education of their children.
Repayment of home loan:
In cases when the property is registered in the name of the employee, their spouse, or both of them jointly, a portion of the employee’s EPF corpus may be used to partially pay back a house loan. With a minimum of 10 years of service, employees can take up to 36 times their basic monthly pay plus the dearness allowance.
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