Belying rumours about tightened norms for Provident Fund (PF) withdrawal, the Employees' Provident Fund Organisation (EPFO) actually has some good news for its over 5 crore subscribers. Yesterday the retirement fund body decided to give its members an option to withdraw 75 per cent of their total PF balance after one month of unemployment.
Members would also have an option to withdraw the remaining 25 per cent of their funds and opt for a final settlement of their accounts after completion of two months of unemployment under the new provision in the Employee Provident Fund Scheme 1952.
"We have decided to amend the scheme to allow members to take advance from its account on one month of unemployment," Labour Minister Santosh Kumar Gangwar, who is also the Chairman of EPFO's Central Board of Trustees (CBT), told reporters after the trustees meet. At present, a subscriber can only withdraw his or her funds after two months of unemployment.
According to The Economic Times, the CBT agenda note for the meeting yesterday had said that "EPF Scheme 1952 does not have provision for advance to members during such kind of non-employment, and the scheme allows only full and final settlement. This compels members to withdraw entire amount. Such early closure of membership also goes against the objective of providing social security to the members and family."
While the proposal capped the limit for advance on unemployment of over 30 days at 60 per cent, the CBT - EPFO's apex decision making body - raised the limit to 75 per cent in the meeting. As Gangwar pointed out, with this new provision, members will now have an option to retain their account with the EPFO, which one can use after finding another job.
"We approved almost the entire agenda listed for the meeting of the CBT. We have also given an extension of one year to ETF [exchange-traded funds] manufacturers SBI and UTI Mutual funds till July 1, 2019. We have also extended the term of fund managers till December 31, 2018," added the minister.
He is referring to the proposal to give an extension of six more months to EPFO's five fund managers SBI, ICICI Securities Primary Dealership, Reliance Capital, HSBC AMC and UTI AMC for managing its corpus. These had been appointed for a three-year tenure from April 1, 2015, but were previously given extension till June 30, 2018.
Interestingly, the minister said that the EPFO's ETF investment would soon cross Rs 1 lakh crore mark as it has already invested Rs 47,431.24 crore till end May this year, earning a return of 16.07 per cent. To remind you, though the government had allowed bodies like EPFO to invest in the equity market in 2008, it was only in April 2015 that it tweaked rules and set the minimum limit for equity investment at 5 per cent. The equity investment limit was subsequently raised to 10 per cent in 2016-17 and 15 per cent in the last fiscal.
On the widening of the range of the ETF investments by the EPFO, a CBT member said that the agenda was deferred and the board was unanimous that a call will be taken on the advice of new fund managers and consultants to be appointed shortly. According to the daily, so far it has invested in UTI Mutual Fund, SBI Mutual Fund, CPSE ETF and Bharat 22. A proposal had suggested amending the EPFO's investment pattern to enable it to invest in equity index ETF beyond NIFTY 50 and Sensex ETF.
The EPFO has also extended the tenure of its consultant CRISIL for evaluation of the performance of fund managers till December 31, 2018.
With PTI inputs