Last Update: February 10, 2023, 15:15 IST
EPF savings form a corpus and also provide pension to the employees after their retirement.
Individuals are not allowed to make complete withdrawals from their EPF balance during transition between their old and new employer
EPF savings form a corpus and also provide pension to the employees after their retirement. Partial withdrawal from EPF is allowed only under certain conditions. Employees’ Provident Fund (EPF), commonly known as Provident Fund, is a savings scheme for employees in the private sector to create a retirement fund.
As per the current EPF rules, any company or organization employing more than 20 employees must be registered with the Employees’ Provident Fund Organization (EPFO). All the salaried employees are eligible to enroll under the EPF scheme.
EPF savings form a corpus and also provide pension to the employees after their retirement. EPFO, one of the largest social security organizations in the world, is a statutory body created to provide financial security to employees in the private sector after their retirement.
After retirement, the corpus of this fund will be available to the employees for withdrawal. Employees are required to contribute 12% of their basic towards EPF and an equal amount is contributed by the employer.
EPF withdrawal can be done partially or fully as per the defined criteria. EPF can be withdrawn completely only under two circumstances. The first criterion is when an employee retires. Secondly, 75% of the accumulated PF amount can be withdrawn if a person remains unemployed for more than a month. The remaining 25 per cent can be withdrawn if the period of unemployment of the person exceeds two months.
Individuals are not allowed to make complete withdrawals from their EPF balance during transition between their old and new employers.
Partial withdrawal of EPF balance can be done only under the following conditions:
Partial withdrawal before retirement:
90% of the accrued amount along with interest can be withdrawn one year before retirement, but the age of the employee should be 55 years or more.
Medical Requirements:
Without meeting any service requirements, an employee can withdraw partially up to six times of his basic pay and DA, or his entire employee’s share and interest, for his medical needs.
Purchase of land or purchase/construction of house:
With a minimum of five years of employment, withdrawals are allowed up to 24 times the basic monthly salary and DA for purchase of land and dearness allowance up to 36 times the basic monthly salary for purchase of a house.
Marriage and Education:
After at least seven years of service, an employee can withdraw up to 50% of his share of EPF contribution towards his marriage, marriage of his children, or education of his children.
Home Loan Repayment:
In cases where the property is registered in the name of the employee, his spouse or both jointly, a part of the employee’s EPF corpus can be used to partially repay the home loan. With at least 10 years of service, employees can draw 36 times their basic monthly salary plus dearness allowance.
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