In a significant move aimed at providing financial flexibility to subscribers, the Indian government has raised the withdrawal limit for the Employees’ Provident Fund (EPFO) to ₹1 lakh.
Additionally, there are indications that the salary ceiling for EPF contributions may also see an upward revision.
Enhanced Withdrawal Limit and Eligibility for New Employees
Union Labour Minister Mansukh Mandaviya announced that EPFO subscribers can now withdraw up to ₹1 lakh at once from their accounts for personal financial needs. This marks a substantial increase from the previous limit of ₹50,000.
The move recognizes the changing consumption patterns and the need for higher liquidity during emergencies. Subscribers often turn to their EPF savings for expenses like medical treatments, weddings, or other urgent requirements.
Previously, new employees were restricted from withdrawing funds until they completed six months in their current job.
However, this restriction has been lifted, allowing even those who haven’t completed six months to access their EPF savings.
This change acknowledges the financial challenges faced by new employees and provides them with early access to their accumulated funds.
Interest Rate and Transition for Non-EPFO Organizations
The EPFO’s savings interest rate, currently set at 8.25% for FY24, remains a crucial benchmark for the salaried middle class.
The increased withdrawal limit ensures that subscribers can tap into their savings without compromising long-term financial stability.
The government has allowed organizations not part of the EPFO to transition to the state-run retirement fund manager.
Certain businesses, established before the EPFO’s creation in 1954, can operate their own private retirement schemes.
Approximately 17 such companies, with a total workforce of 100,000 and a corpus of ₹1,000 crore, may choose to switch to the EPFO.
The government emphasizes that EPF savings offer better and stable returns.
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