The Employees’ Provident Fund (EPF) scheme has been designed to provide financial security to the salaried employees in the private sector after their retirement. The scheme managed by Employees’ Provident Fund Organisation (EPFO) helps salaried employees to build a corpus fund with a small contribution every month.
An employee contributes 12 per cent of the basic salary and dearness allowance every month towards EPF and an equal amount is also contributed by the employer. The EPF savings are mainly aimed at building a retirement corpus and premature withdrawals are not allowed. However, the EPFO allows EPF advance withdrawal under certain conditions.
What are the conditions for premature withdrawal of EPF?
Unemployment: If an EPF subscriber is unemployed for a month, then up to 75 per cent of the corpus can be withdrawn. In addition, if the EPFO member remains unemployed for over two months, the remaining 25 per cent funds can be withdrawn.
Marriage: An employee can withdraw 50 per cent of their contributions to the EPF account for managing expenses related to their marriage or an immediate family member’s marriage. However, one would be eligible for such withdrawals only after seven years of contribution.
Children’s Education: The EPF deposits can be withdrawn in advance to fund higher studies of children. For this purpose, the EPF members can withdraw up to 50 per cent of the contribution made by them towards the PF account. To be eligible, one has to contribute to the PF account for at least seven years.
Medical Emergency: EPF account holders can pay for medical emergencies for specific illnesses using their PF corpus. They can use these funds for themselves or their immediate family members. However, the amount available would be limited to six months of basic pay and dearness allowance or the employee’s contribution and interest, whichever is lower.
Specially-abled Employees: Specially-abled salary earners can use six months of basic pay and dearness allowance or their contribution and interest accrued, whichever is lower, to meet equipment costs.
Home loan repayment: Employees can withdraw basic pay and DA of up to 36 months or their contribution towards the account and the interest accrued, to pay EMIs of their home loan. One thing to note here is that an EPFO member can avail this facility only after 10 years of contribution to the EPF account.
Acquisition of land or residential property: The EPF account holder can withdraw up to 90 per cent of the EPF balance to purchase land or ready to move property. The EPF advance can also be withdrawn for renovation of an existing housing property.
