Pay interest on retained PF or give entire amount: Unions

Earlier this month, Employees Provident Fund Organisation (EPFO) tightened the norms for withdrawals of PF accumulations for its over five crore subscribers.

PTI| Last Updated: Feb 28, 2016, 18:37 PM IST
Pay interest on retained PF or give entire amount: Unions

New Delhi: Trade Unions including RSS-backed Bhartiya Mazdoor Sangh (BMS) have demanded that retirement fund body EPFO shall either allow unemployed subscribers to withdraw their entire PF or give interest on retained amount.

"We will demand from Labour Minister that either EPFO pays entire amount in PF account or pay interest on the retained amount to unemployed subscribers opting for withdrawal as per new norms," Indian National Trade Union Congress Vice-President and an EPFO trustee Ashok Singh told PTI.

Earlier this month, Employees Provident Fund Organisation (EPFO) tightened the norms for withdrawals of PF accumulations for its over five crore subscribers.

Now the subscribers can withdraw only 90 percent of their own contributions to PF account and interest earned on that after pleading over two months of unemployment.

Earlier they were allowed to withdraw entire PF accumulations after showing two months of unemployment.

Under the new norms two months unemployment condition shall not apply in cases of women subscribers resigning for getting married or on account of pregnancy or child birth.

BMS General Secretary Virjesh Upadhyay said, "The EPFO must give interest on the retained amount in case unemployed subscribers opts for withdrawal. They should not make the account inoperative."

The new norms are silent on crediting interest to such accounts where subscribers opts for withdrawal due to unemployment and does not contributes to his account for a period of more than three years.

A PF accounts becomes inoperative after no contribution is made for continuous 36 months period. This provision was made in the scheme to avoid parking of funds with EPFO.

Under the new norms their could be a situation where subscribers opt for withdrawals of his PF accumulation pleading unemployment and does not get a job even after three years. In those cases the account will become inoperative and no interest will be credited.

The new norms also provides that subscribers will not be able to claim withdrawal of PF after attaining 54 years of age. They would have to wait till attaining the age 57 years.

As per the earlier norms, subscribers were allowed to claim 90 percent of their accumulations in their PF account at the age of 54 years and their claims were settled just one year before their retirement.

The earlier clause was relevant because there were establishments where retirement age was 55 years or 56 years. But this will create a problem in private as well as public sector where people opt for voluntary retirement.

The big change is that now under this facility, the subscriber would be able to withdraw his contribution and interest earned on it unlike 90 percent of the total accumulations earlier.

In another change, EPFO has made it mandatory to wait till attaining the age of 57 for claiming PF withdrawal for transferring that to the Life Insurance Corporation of India for investment in Varishtha Pension Bima Yojana.

Earlier norms used to allow subscribers to claim 90 percent of their accumulations for investing in the scheme after attaining the age of 55 years.