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Withdrawing PF may no longer be easy
November, 09th 2006

You may no longer be able to bank on your provident fund (PF) to bail you out every time you need cash.

With a large number of people withdrawing their PF money when they switch jobs, the Employees Provident Fund Organisation (EPFO) is working on tightening the norms to ensure that employees have sufficient cash, and a pension option, to take care of their post-retirement needs.

Unlike now, when you can depend on your PF accruals to meet a variety of spending needs, EPFO proposes to block 40% of your contribution and release it only after you turn 58. At present, rules permit partial withdrawals for financing insurance premiums, housing, illness, marriage, higher education, natural calamities, purchase of aids by the handicapped, needs arising out of closure of a factory or retrenchment and, of all things, power cuts! In some cases, employees can withdraw up to 90% of their PF savings.

According to the fresh proposals , 30% of the accumulation or interest earned will be set aside for buying or building a house. But you can tap this source only if you have been an EPFO subscriber for at least five years and have Rs 20,000 in your account.

As for your other contingencies, there is the remaining 30% which can be used once every five years. If the proposals are accepted by EPFOs board, no other withdrawals would be permitted.

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