You can now withdraw Rs 1 lakh at a time from EPF, up from Rs 50,000

Union Labour Minister Mansukh Mandaviya said on Tuesday that subscribers of the Employees' Provident Fund Organisation (EPFO), the government-run retirement savings manager, can now withdraw up to ₹1 lakh at a time from their accounts for personal financial needs, an increase from the previous limit of ₹50,000.

Mr Mandaviya pointed out on the occasion of the Modi government’s 100 days in office that the Labour Ministry had recently updated the EPFO's operations. For instance, new employees who have not completed six months in their current job could now withdraw funds, a change from the previous restriction.

Provident Funds provide retirement income to more than one crore of employees in the organised sector and frequently represent the primary source of lifetime savings for many workers. The EPFO's savings interest rate, set at 8.25% for FY24, is a key benchmark closely monitored by the salaried middle class.

Private retirement schemes can now join EPFO 

In another significant shift, the government has allowed organisations not part of the EPFO to transition to the EPFO. Certain businesses can operate their own private retirement schemes due to an exemption, primarily because their funds were established before the EPFO was created in 1954.

“There are 17 such companies with a total workforce of 1,00,000 and a corpus of ₹1000 crore. If they want to switch to EPFO from their own funds, they can do so. The government’s PF savings give better and stable returns,” the minister said.

An official noted that companies like Aditya Birla Ltd have contacted the government requesting this arrangement, leading the government to adjust its policy.

Salary threshold for EPF, ESI to rise

The minister announced that the government was developing plans to raise the income threshold for mandatory provident fund contributions from ₹15,000 for salaried employees. Additionally, the income threshold for Employees’ State Insurance, currently set at ₹21,000, will also be increased.

Mr Mandaviya saidt employees earning over ₹15,000 can choose the portion of their income they wish to allocate for retirement benefits and pension.

Under the Employees’ Provident Funds and Miscellaneous Provisions Act of 1952, companies with 20 or more employees are required to contribute to provident funds. This includes a mandatory deduction of at least 12% of an employee’s salary, with the employer also contributing an additional 12%.

(By arrangement with livemint.com)