A step forward towards easy PF schemes
Up to 75% of funds can now be withdrawn after a 30-day unemployment period and the remaining 25% after a period of 2 months for EPFO members.
EFPO granted much flexibility for their employees regarding the withdrawal of their funds. Now, the members can still keep their account active along with the option to withdraw 75% of their funds up to 30-days of unemployment period. This announcement has made a drastic difference in people’s lives along with its 5.5 crore subscribers.
EFPO members can now settle their accounts by pulling out their cumulative corpus under the revised Employee Provident Fund Scheme of 1952 post two months of unemployment.
“We have decided to alter our scheme to allow members to withdraw advance from their accounts up to one month of unemployment. 75% of the funds can be withdrawn and the person can still keep an account with EFPO”, says Labor minister, Santosh Kumar Gangwar, the Chairman of the Central Board of Trustees at the EPFO.
He further added that soon EPFO's ETF investment will cross the Rs.1 lakh crore mark till May end by already investing Rs. 47,431.24 crore and earning a return of 16.07% but now the CBT raised the limit to 75% in their latest meeting.
Gangwar further said “Today at the CBT meeting we approved the entire agenda list. Extensions till July 1, 2019 to ETF manufacturers SBI and UTI mutual funds. The term of fixed managers has also been extended till December 31, 2018.
An extension to five fund managers of six more months was also proposed. The managers of SBI, ICICI Securities Primary Dealership, Reliance Capital, HSBC AMC and UTI AMC had been appointed for a period of three years from April 1, 2015. They have been handed an extension till June 30, 2018. Moreover, the CBT is keen and excited for the selection of portfolio managers by appointing a consultant.
VP Joy, Central PF Commissioner stated that they are “trying to provide subscribers a substantial portion of the corpus, yet not shut the account. When he/she gets a new job the old account money can be transferred to the new account with the new employer”.
The current PF scheme has been quite modified by the decision. The employees would have lost his/her eligibility if they closed their PF account after 2 months of unemployment and needed a 10-year eligibility for pension in the previous scheme. Now, despite unemployment they can still keep their account. Though this scheme still lacks behind the schemes provided in countries like France, Germany or Japan but it can be still marked as a step forward towards better relevant PF schemes.
An approval for diversifying its equity portfolio beyond Sensex 30 stocks and Nifty 50 was requested to the Finance ministry. In 2015 EFPO started investing in exchange trade funds with a compulsion of investing 5% in the equity-based scheme out of its investible deposits. The mandate was later changed to 10% in 2016-17 then further increasing to 15% now.
