EPFO faces challenge of young subscribers withdrawing full PF corpus

The facility of compounding! That’s the magnificence of deposits in retirement financial savings such because the Workers’ Provident Fund that’s at present providing an curiosity of 8.25% on contributions.

Involved with a excessive quantity of withdrawals by young subscribers, the Workers’ Provident Fund Organisation is taking a look at methods to handle this drawback and the way it may be addressed.

“In a number of cases, it’s discovered that subscribers withdraw their whole PF corpus on the time of change of jobs. Sustaining their PF corpus may help them not solely put together for retirement or wants similar to home constructing or marriage of kids throughout their working lives, however it additionally ensures that they get a good-looking return due because the corpus grows,” officers have identified.

Sources indicated that the EPFO is making an attempt to discover methods to encourage the behavior of retirement financial savings, particularly amongst young subscribers.

Beneath the present EPF guidelines, a member can withdraw your complete PF corpus after retirement. Nonetheless, the principles allow that members may also withdraw as much as 75% of the PF corpus after one month of unemployment and 100% of the corpus after two months of unemployment.

Whereas the target of the rule is to make sure that staff who face job losses or unemployment can fall again on their PF corpus to tide them over, typically, EPF subscribers after resigning from the job, withdraw their corpus after a two month wait.

Officers mentioned that this may be for a number of causes similar to investing in different devices similar to equities the place the returns could also be greater or utilizing the corpus for some buy. “Many instances, young folks really feel that there is no such thing as a want to start out saving for retirement as it’s a number of years away. However by saving from the beginning of their careers, they may have a wholesome sum of cash after they retire. That is particularly essential on condition that within the non-public sector, most staff don’t get a pension,” famous a supply.

In line with official knowledge, the EPFO acquired a complete of 7.1 million claims for remaining PF settlement between April 1, 2024 and March 7 this 12 months. Of this, it had settled 50 million claims amounting to Rs 55,133.52 crore. The quantity of EPFO member accounts have elevated to 325 million from 117 million over the last 10 years from FY15 to March 7, 2025.