Kolkata: The EPFO (Employee’s Provident Fund Organisation) is rapidly transforming from a fuddy-duddy bureaucracy-driven organisation to a digital, employee-responsive
organisation. The latest reform that the labour ministry has taken up for EPFO — the EPF manager operates under the labour ministry — involves making a part of the EPF outstanding amount liquid. In simpler words, it would be available for transferring the funds bank accounts linked to the EPF accounts.
The objective of the plan is to earmark a part of the EPF balance to be frozen for future use by the employee. But subscribers can find the eligible EPF balance which can be transferred into bank accounts which are linked to the EPFO. Needless to say, this money will be available for consumption by the employee. Moreover, employees will have the convenience of using their UPI platform for undertaking transactions that will carry out transfer of the funds securely into the bank account. Thus, it will amount to injecting big liquidity into the EPF account, the basic objective of which is to store the funds for use after retirement by the employee and his/her family.
When can the facility be available?
According to reports, the facility could become available by the beginning of the next financial year. Once it is implemented, it would benefit as many as eight crore EPFO members. They would have instant access to a significant part of their EPF balance simply at the touch of a few buttons on their mobile phones. IN real terms what it means that none of the EPFO members will have to file applications and wait for approvals to withdraw their own money that is lying in the EPF account.
With the money moving from their EPF accounts to their bank savings accounts, EPFO subscribers can tap into it and use it for any transaction just as they use debit cards and UPI platforms. This amount can also be withdrawn in the form of cash from ATMs. According to reports, the amount in the EPF account frozen for retirement could be 25% of the outstanding balance.
Word of caution
However, there is a word of caution from finance experts. “EPF was originally designed for funds too used in post-retirement life, when income stops for most individuals but many expenditures of life go on while healthcare costs can actually increase. Therefore, it might not be advisable for most to consume EPF funds before retirement. One should be extremely cautious in using EPF money for regular, or whimsical consumption, which can be triggered if suddenly a significantly large amount of money is available in the savings account,” cautions investment expert and director Wishlist Capital Nilanjan De.
Current practice for premature withdrawal from EPF
Right now if one needs to make partial and premature withdrawals from one’s EPF account, one needs to file a withdrawal claim. Following the claim, one has to wait for an approval from the authorities to get the money transferred to the savings account linked to the bank. Formal applications must be done even if the amount is relatively small and falls within the auto-settlement route which is faster. Once the new system is implemented all this will be unnecessary and EPFO subscribers will get to see the amount which they can get transferred to their savings account simply by pressing a few buttons. The rest of the EPF money will be kept for post-retirement life.
