New PF Rule: You Can Withdraw Up To Rs 1 Lakh Within 6 Months Of Joining. Here're The Details

New PF Rule: In another major move, the government has allowed businesses previously exempt from EPFO participation to switch to the state-run retirement fund manager

New PF Rule: The government is also working to raise the income threshold of Rs 15,000, above which provident fund contributions become mandatory.

Source : PTI

New PF Rule: Subscribers of the Employees' Provident Fund Organisation (EPFO) can now withdraw up to Rs 1 lakh at a time for personal financial needs, doubling the previous cap of Rs 50,000, Union Labour Minister Mansukh Mandaviya announced during a press briefing on Tuesday.

The decision is part of a broader set of reforms aimed at making the EPFO more flexible and user-friendly. Among the key changes is a revamped digital architecture, along with relaxed norms that now allow even new employees who haven't completed six months at their current job to make withdrawals, a provision that was previously restricted.

"People often turn to their EPFO savings for expenses such as weddings and medical treatments. We have enhanced the withdrawal limit to Rs 1 lakh at a time," Mandaviya said, marking the occasion of the government’s completion of 100 days in office. He added that the older limit had become outdated in light of rising consumption expenditures.

The EPFO, a key component of retirement savings for over 10 million employees in the organised sector, offers an interest rate of 8.25 per cent for FY24. This rate is closely monitored by the salaried middle-class as it directly impacts their lifetime savings.

In another major move, the government has allowed businesses previously exempt from EPFO participation to switch to the state-run retirement fund manager. Exempted organisations, primarily those with retirement schemes predating EPFO's establishment in 1954, can now opt to join the EPFO.

"There are 17 such companies, with a total workforce of 100,000 and a corpus of Rs 1,000 crore. They will be permitted to switch to the EPFO if they wish. The government’s provident fund offers better and more stable returns," Mandaviya explained.

The government is also working to raise the income threshold of Rs 15,000, above which provident fund contributions become mandatory. Additionally, there are plans to increase the Rs 21,000 threshold applicable to Employees' State Insurance. For employees earning more than Rs 15,000, there will be greater flexibility in determining how much of their income they would like to allocate towards retirement savings and pensions, the minister added.