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COVID-19 impacts EPFO withdrawals: 8 million members pull out Rs 30,000 crore during April-July

The salary cuts, job losses and medical expenses incurred due to COVID-19 pandemic explain the significant increase in EPFO withdrawals by retirement fund's subscribers

twitter-logoBusinessToday.In | July 28, 2020 | Updated 09:49 IST
COVID-19 impacts EPFO withdrawals: 8 million members pull out Rs 30,000 crore during April-July
The EPFO expects around 10 million members to withdraw from their savings in the days ahead if the current trend of withdrawals continues

The Employee Provident Fund Organisation's (EPFO) subscribers have withdrawn Rs 30,000 crore from April-July, 2020. Around 8 million members have pulled out money in under four months from their EPF accounts.

A corpus of Rs 10 lakh crore is managed by the EPFO, which is built on obligatory contributions from around six crore (60 million) salaried employees and their employers.

This huge outgo will, in all likelihood, impact the fund's earnings in FY21, the Economic Times reported citing sources, further adding that the amount withdrawn between April and the third week of July is far more than the usual outgo seen over comparable periods.

Also Read: EPFO update: One-third of registered companies default on April PF dues

And the salary cuts, job losses and medical expenses incurred due to COVID-19 pandemic explain this significant increase. An EPFO official told the daily that "of the total withdrawals, nearly three million beneficiaries withdrew upwards of Rs 8,000 crore under the COVID-19 window", while the remaining Rs 22,000 crore was "a general withdrawal by five million EPFO subscribers, mainly as medical advance".

Finance Minister Nirmala Sitharaman had announced a special Covid window for withdrawals subsequently after the government declared a countrywide lockdown in late March to stem the further spread of coronavirus.

Meanwhile, the overall impact on returns of this huge withdrawal will be known after "detailed micro-level analysis", officials said.

The EPFO expects around 10 million members to withdraw from their savings in the days ahead if the current trend of withdrawals continues.

Also Read: Only 4.19 lakh net jobs created in April and May 2020: EPFO

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