Millions of Employees in India have an enormous fund for retirement and the Employees’ Provident Fund Organization provides this financial safety net. EPFO recognizes, though, that contributors might have substantial financial needs before retirement. Consequently it allows partial withdrawals from the EPF in a few circumstances. Understanding these conditions could help you control your finances and access your EPF savings whenever necessary. These are ten instances where you could withdraw cash out of your EPF account before retirement.
10 Situations When You Can Withdraw EPF Money Before Retirement
Mentioned below are 10 instances where you can choose to withdraw cash out of your EPF account before retirement.
1. Withdrawal for Marriage
A common reason for EPF withdrawal is marriage. EPFO members may withdraw up to half of their EPF balance to marry self, daughter, son, sister or brother. However there’s a prerequisite: the member must have attained seven years of EPF contribution. This provision helps families cope with the usually substantial costs of weddings to avoid financial pressures from ruining these special occasions.
2. Withdrawal for Education
Education is an investment and EPFO comprehends this. Members can withdraw EPF money to support their children’s post-matriculation education. This provision might be especially useful for higher education related costs (tuition costs, accommodation, etc.). Like the marriage withdrawal, this too requires the member to have had more than seven years EPF contributions.
3. Withdrawal because of Unemployment
Unemployment is financially devastating. EPFO enables members to withdraw funds after being unemployed for a month or more to assist members through such tough times. In such instances, members can withdraw up to 75% of EPF balance. In case unemployment lasts longer than two months they can withdraw the remaining twenty five% allowing complete withdrawal of EPF balance. This measure helps provide a cushion during job loss periods.
4. Withdrawal for Medical Treatment
Health emergencies can happen suddenly and cause substantial medical expenses. EPFO members may withdraw EPF funds for medical treatment in a few circumstances. In case a member, dependent parents, children, or their spouse are identified as having a terminal illness including tuberculosis, leprosy, paralysis, cancer, psychological disorder or heart ailments, they might withdraw funds for treatment. The withdrawn amount may be the member’s complete contribution plus interest, if the member doesn’t have access to Employees’ State Insurance Scheme (ESIS) services.
5. Withdrawal for Purchase or Construction of House
Having a home is an immense financial commitment. EPFO enables members to withdraw cash to buy a plot or even construct a home. This particular withdrawal is open to individuals that have achieved 5 years of EPF membership. The withdrawn sum may be used for land purchase, building & home loan repayment.
6. Withdrawal for House Renovation
Besides buying or building a home, EPFO users may withdraw funds for home improvement or repairs. This provision is available after 5 years from completion of home construction or from house purchase date. Members can withdraw up to 12 times their monthly wages (basic + DA) or the employee’s share with interest or the real cost, whichever is less.
7. Withdrawal Because of Natural Calamities
Disasters like floods, quakes, and cyclones can cause considerable property loss. EPFO enables users to withdraw as much as Rs 5,000 or 50% of the EPF payment, whichever is lower, to cover damages suffered by such unfortunate events. This provision allows members to access funds quickly to make needed repairs and also to restore their houses.
7. Withdrawal for Equipment Purchase by Physically Handicapped Members
EPFO supports physically handicapped members by allowing them to withdraw funds to buy equipment to relieve their challenges daily. This particular non refundable advance could be utilized to buy assistive devices like wheelchairs, prosthetics along with other items which lessens hardship and also enhances life expectancy for these people.
9. Withdrawal Before Retirement
Members may need access to funds as members approach retirement for an assortment of reasons, including easing into retirement. EPFO members can withdraw up to 90% of their EPF balance when they reach age fifty four or one year before actual superannuation retirement whichever happens later. This helps members control their finances when they exit the workforce.
10. Withdrawal to Varishtha Pension Bima Yojana
To encourage financial security after retirement, EPFO enables users to withdraw up to 90% of the EPF balance anytime after the age of fifty five to purchase the Varishtha Pension Bima Yojana (VPBY) of Life Insurance Corporation of India (LIC). This government backed pension scheme guarantees a stable income for seniors.
Final Words
The EPF scheme is no simple retirement fund: it’s more than a bank account. It also offers a financial safety net for members when critical times of life strike. Whether it’s funding a child’s education, medical expenses, unemployment or buying a house, EPFO’s provisions for partial withdrawals ensure members can weather the storms of life. EPF members must be familiar with these provisions so they can make sound financial decisions and utilize EPF savings if needed. Check the latest EPFO guidelines and talk to financial advisors like StartupFino in case necessary to use your EPF funds to the maximum.
FAQs
Can EPF be withdrawn before retirement?
EPFO allows withdrawal of 90% of EPF corpus 1 year before retirement in case the person is over fifty four years of age. EPF corpus can be withdrawn in case of unemployment just before retirement because of lock-down and retrenchment.
In what conditions EPF may be withdrawn?
No one is permitted to withdraw PF funds partially or entirely until employment. One can withdraw as much as seventy five% of the money in case unemployed for a minimum of one month and the balance in case unemployed for two months or even more.
What is the PF withdrawal scenario?
The entire EPF can be withdrawn on retirement. The EPFO retirement age is 55 years. An employee may withdraw 90% of EPF money just one year before retirement age 54 years. After a month of unemployment an employee can withdraw 75% of the EPF amount.
Can I withdraw my 100% PF amount?
In these situations EPF may be withdrawn: An employee retires. Unemployed for over a month can withdraw 75% of fund. If an individual is unemployed for over two months he/she is able to withdraw 100% of fund.
What are new rules for PF withdrawal?
Exposed to the new regulations, PF account holders can withdraw three months of their basic salary along with dearness allowance or 75% of the net balance in their EPF account, either the lower of two amounts.
