Ministry of Statistics and Programme Implementation (MOSPI) reported approximately 31.36 lakh new members to the Employees’ Provident Fund Organisation (EPFO) between the ages of 22 and 25 years between 2017 and 2018.
All salaried individuals having monthly incomes of less than Rs.15,000 are required to have an EPF account, wherein equal contributions are made by both respective employees and employers.
The primary aim of Employees’ Provident Fund is to ensure secure retirement planning of employees in India, which is facilitated through nominal contributions made every month for an extended period. An EPF account remains active till retirement of an individual, and PF account balance check can be done online to track total deposits periodically. As it primarily ensures accumulation of a hefty amount to secure the finances of an employee post-retirement, a strict withdrawal clause is associated with a Provident Fund balance.
Nonetheless, individuals can withdraw Provident Balance from the EPFO website directly by filing a claim online.
EPF withdrawal process –
Step 1 -Visit the official website portal of EPFO.
Step 2 – Click on ‘Online Services’
Step 3 – Go to ‘Claim (Form 31, 19 and 10C)’ option.
Step 4 – Sign in using your UAN and registered mobile number.
Step 5 – Personal information will be displayed on the screen. Carefully go through the same and select ‘Verify’ after entering the last four digits of your account.
Step 6 – A certificate would be displayed on the screen. Click on ‘Yes’ and sign the form using a digital signature.
Step 7 – Select ‘Proceed for online claim’ in this window.
Step 8 – Click on ‘PF Advance (Form 31)’ and fill in the purpose of withdrawal along with stipulated amount and address of the employee organisation.
Step 9 – Upload scanned copies of all supporting documents, and submit the form.
It is imperative to note that respective employers have to approve of withdrawal of such funds before the same is disbursed (up to the amount displayed in PF account balance check) to an applicant’s linked account. However, this depends on the reason listed as the purpose of withdrawal on the online application form; such transfers are only made subject to fulfilment of certain conditions.
When can provident fund balance be withdrawn?
You can partially or wholly withdraw the balance in provident fund in the following conditions –
- Entire corpus upon retirement after 60 years, or early retirement after 55 years.
- 75% of the total balance if an individual is unemployed for one month, and the remaining 25% will be transferred to the new account created after employment.
- Partial withdrawal (up to the value of expenses) to pay for higher education fees, house purchase/construction, or medical emergency.
As provident funds usually contain a substantial corpus, individuals often look for reinvestment options of the surplus funds. One of the most meaningful ways to use the EPF money is to invest it in a fixed deposit scheme, as it provides assured high returns for a lock-in period suiting every financial need.
Non-banking financial institutions such as Bajaj Finance offer best FD rates of up to 8.10% interest on Fixed Deposits with flexible tenor options, ranging from 12 months to five years. Additional benefits for senior citizens in the form of higher interest rates are also offered on such plans.
Fixed deposits are one the best schemes for saving your money as it maintains provisions for premature withdrawal of the invested amount to meet any unforeseen emergency expenses, along with offering the best FD rates. Such facilities are not available on any government-mandated savings-cum-investment schemes. Also, the popularity of fixed deposit plans has led most NBFCs to offer online application procedure with an instantaneous transfer of funds through debit cards, net banking, cheques or demand drafts.
Thus, any excess fund procured from the withdrawal of Provident Fund balance (which can be viewed directly through PF account balance check) can be deposited in non-market related instruments for substantial returns, increasing the total portfolio value. This ensures adequate availability of funds to meet all retirement expenses of salaried individuals, reducing the dependency ratio in India. High interest rates also act as a hedge against prevailing inflation rates in the country, thereby preserving the real value of funds obtained through EPFs.