Union Labour Minister Mansukh Mandaviya announced on Tuesday that members of the government-run Employees' Provident Fund Organisation (EPFO) can now withdraw up to ₹1 lakh at once from their accounts for personal financial needs, up from the previous cap of ₹50,000.
According to the minister, the labor ministry has made a number of adjustments to the EPFO's operations, such as updating its standards and implementing a new digital framework, to improve flexibility and responsiveness and minimize interruptions for subscribers. Furthermore, a modification from the prior rule allows new hires who have not yet completed six months in their present position to withdraw cash.
People frequently use their EPFO funds to pay for weddings, medical care, and other needs. Mandaviya announced an increase in the withdrawal limit to ₹1 lakh for each transaction to commemorate the government's 100-day tenure.
The new withdrawal limit was raised since the old limitation had become obsolete owing to shifting consumer expenditures.
More than 10 million organized sector employees get retirement income from provident funds, which are typically the only source of lifetime savings for many individuals. The EPFO's savings interest rate, which is set at 8.25% for FY24, is a crucial benchmark carefully watched by the salaried middle class.
In another key development, the government has permitted organizations that are not members of the EPFO to transfer to the State-run retirement fund management. Certain enterprises can run their own private retirement plans thanks to an exception, generally because their funds were formed before the establishment of the EPFO in 1954.
There are 17 enterprises with 100,000 employees and a corpus of ₹1000 crore. If they choose to move to EPFO instead of their own fund, they can. The government's PF savings provide better and more stable returns," the minister stated.
An official added that corporations such as Aditya Birla Ltd contacted the government to propose this arrangement, prompting the government to change its stance.
Strategies Ahead
The minister announced intentions to raise the mandatory provident fund contribution level from ₹15,000 for paid personnel. The income threshold for Employees' State Insurance, now at ₹21,000, will be raised.
Mandaviya added that employees earning over ₹15,000 have the opportunity to designate a percentage of their salary for retirement benefits and pension.
Employees' Provident Funds and Miscellaneous Provisions Act of 1952 requires enterprises with 20 or more employees to contribute to provident funds. This involves an obligatory deduction of at least 12% from an employee's wage, with the employer contributing an extra 12%.
