EPFO’s new withdrawal rules aim to strike a fine balance between flexibility and social security

Emphasizing the importance of maximizing returns, Central Provident Fund Commissioner Ramesh Krishnamurthy said the Employees’ Provident Fund Organization (EPFO) has tried to strike a delicate balance between flexibility and old-age security through its new withdrawal rules.

In an interaction with Business Today, Krishnamurthy said that the general feedback is that it is a positive step and that it is beneficial for the workers, not only in the short term, but also in the long term. “We have tried to balance the long-term need for Social Security with the short-term need to meet any emergency or other immediate financial requirements of members,” he said.

The EPFO ​​Central Board of Trustees in its meeting on October 14 simplified the partial withdrawal provisions of the EPF scheme by consolidating 13 provisions into three broad categories, including basic needs such as illness, education and marriage; Housing needs and special circumstances. However, 25% of subscriptions have also been set aside in a member’s account as a minimum balance that must be maintained at all times.

The move sparked a lot of controversy with some raising concerns that the EPFO ​​was withholding 25% of members’ contributions while others criticized the decision as making it easier for members to withdraw important retirement savings.

However, Krishnamurthy pointed out that the EPFO’s analysis showed that there has been a massive explosion in the number of claims for the disease, which has jumped to nearly Rs 3.24 lakh crore. “Illness is the only claim that does not require any need for documentation, has unrestricted repetition, and there are no restrictions on withdrawal. Depending on their needs, members will continue to make these claims,” ​​he said, noting that the thinking was why there should be an artificial distinction. “We wanted to give that flexibility. We also realized that frequent withdrawals were depleting members’ long-term Social Security requirements, and that was also not very desirable. That’s why we tried to strike that delicate balance,” he explained.

Meanwhile, speaking about the recent reforms undertaken by the EPFO ​​to simplify transactions, the CPFC noted that measures such as removing the check paper requirement for withdrawals and simplifying the joint declaration process have greatly benefited subscribers.

“All our reforms have focused on eliminating manual interventions, any kind of discretion, and unnecessary or redundant processes,” he said, stressing that the EPFO ​​is working on more reforms to facilitate transactions for members.

“These reforms have not only made things easier for members but have also reduced the workload on our officers. Now more officers are freed to do a little more important work and focus on settling claims. We have started to see a decline in grievances in categories like JD and remittance,” he further said.

Previously, members had to upload a check paper or a certified copy of the bank’s current book for online claims. “It was not necessary at all, because we were able to validate the bank account from the bank itself, directly and electronically, which is more secure. We have removed this requirement and already around three lakh crore claims have been submitted without approval of check papers,” Krishnamurthy said.

Likewise, removing the need for approval of the previous employer to transfer PF balance has already benefited around 35 to 40 lakh transfers.