Govt Rolls Back Re­stric­tions on PF With­drawal

No bar on 100% with­drawal of funds be­fore re­tire­ment age of 58 years

The Economic Times - - Economy - Our Bureau

New Delhi: Bow­ing to pres­sure from trade unions, the govern­ment has set aside the con­tro­ver­sial prov­i­dent fund (PF) with­drawal norms that had re­stricted com­plete with­drawal from PF ac­count be­fore the re­tire­ment age of 58 years.

This is the sec­ond ma­jor step­back by the govern­ment on prov­i­dent fund in less than two months and comes close on the heels of it with­draw­ing the bud­get an­nounce­ment of im­pos­ing tax on with­drawal from Em­ployee Prov­i­dent Fund (EPF) ac­count.

“The with­drawal re­stric­tion im­posed un­der the EPF scheme was at be­hest of trade unions but now since they don’t want it we have with­drawn the no­ti­fi­ca­tion dated Fe­bru­ary 10,” labour sec­re­tary Shankar Agar­wal said on Tues­day. He said the re­stric­tion was in favour of work­ers, many of them be­ing ig­no­rant and poor with press­ing needs at some point of time. “Since the govern­ment is not con­tribut­ing any­thing to work­ers’ PF, we have de­cided not to re­strict its with­drawal.”

The U-turn has come af­ter labour min­is­ter Ban­daru Dat­ta­treya, ear­lier in the day, re­laxed the with­drawal norms and de­ferred the im­ple­men­ta­tion of the Fe­bru­ary 10 no­ti­fi­ca­tion by three more months till Au­gust 1.

The com­plete roll­back comes in the midst of protests by labour unions in sev­eral parts of the country against the bar on with­draw­ing em­ployer’s con­tri­bu­tion. Peo­ple have also launched on­line cam­paign against the de­ci­sion, which was to be im­ple­mented from Fe­bru­ary 10 but was later put on hold till April 30. Po­lice had on Mon­day re­sorted to lath­icharge in Ben­galuru to dis­perse a crowd of gar­ment fac­tory work­ers protest­ing against the amend­ment to the EPF Act.

The Fe­bru­ary 10 no­ti­fi­ca­tion had re­stricted the with­drawal of em­ploy­ers' con­tri­bu­tion of 3.67% and in­ter­est earned on it un­der the EPF scheme till re­tire­ment or 58 years in­stead of 54 years ear­lier. The move drew flak from trade unions and work­ers.

Un­der the ex­ist­ing rule, em­ploy­ees can with­draw the full PF bal­ance if he or she is out of em­ploy­ment for con­tin­u­ous 60 days. That in­cludes 12% em­ploy­ees' con­tri­bu­tion, 3.67% con­tri­bu­tion from the em­ployer and in­ter­est earned on this in any given year.

How­ever, the 8.67% of the em­ploy­ers’ con­tri­bu­tion to pen­sion un­der the EPS can­not be with­drawn, thus restor­ing the orig­i­nal with­drawal pro­vi­sions un­der the EPF scheme.

Breathe Easy

govt with­drew bud­get an­nounce­ment of im­pos­ing tax on EPF with­drawal

roll­back comes in the midst of protest by labour unions also launched on­line cam­paign against the de­ci­sion

COM­PLETE

Labour Sec­re­tary

The move has been wel­comed by trade unions. “We have al­ways main­tained the PF cor­pus is work­ers' money and hence he should be given the flex­i­bil­ity to with­draw it as and when re­quired,” said Pawan Kumar of RSS-af­fil­i­ate Bharatiya Maz­door Sangh (BMS). D L Sachdeva of All In­dia Trade Union Congress (AITUC) said the unions had never de­manded any re­stric­tion on PF with­drawal. “Work­ers should be given an op­tion whether to with­draw or re­tain his PF till his re­tire­ment and no­body should force any­thing on them,” he said.

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