EPFO Now Allows You to Withdraw Money After One Month. Why it is Not Good For You

Under the new rules, one is allowed to withdraw after one month provided the person is unemployed, but it is common to see people withdrawing their retirement fund even after joining the new job.

You no more need to wait for two months for withdrawing money from company’s provident account. This is because the Employees’ Provident Fund Organization (EPFO) has reduced the period to just one month. But you cannot withdraw the entire amount in one go as you can take out only 75 per cent of your funds and need to keep the rest with EPFO so that you do not discontinue the account and keep it active till you get the next job.

But before you get happy here are a few points to consider. Under the new rules, one is allowed to withdraw after one month provided the person is unemployed, but it is common to see people withdrawing from their retirement fund even after joining the new job. By just ticking on the box that they have not been working anywhere people manage to cash out their retirement savings easily.

The practice needs to be stopped as provident fund savings are meant for your retirement and if you keep withdrawing the amount every time you change the job you are not doing any good to yourself and your family. It is not difficult to find people around you who took out money from their provident fund just to pay their credit cards or buying an expensive watch. Though it is a good practice to live in present, one also needs to be financially sound to enjoy the future, especially after retirement.

The Universal Account Number (UAN), which allows portability of account from one organisation to another without any change in PF number, aims to solve the issue by giving the common number to all employees. EPFO should now be able to track easily whether the person is unemployed or has joined a new job. But it remains to be seen how effective the new system will be, given it has been recently implemented and there is a lot of confusion around the applicability of UAN concept.

Having said that do not withdraw your PF money before you retire. The simple savings can give you a huge corpus when you turn 60, the time when you don’t have any other source of income. To share the power of compounding, if you save Rs 5,000 per month for the period of 35 years, you will have a whopping sum of more than Rs 1 crore at the end of the term. Hence, think twice before withdrawing money from EPFO.

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