Interest rates offered on the Employee Provident Fund (EPF) have been steadily falling. EPF used to offer interest rates of 8.8% in the Financial Year 2015-16. EPFO has cut interest rates to 8.55% for the Financial Year 2017-18.
If you are a salaried employee, you must be well familiar with the Employee Provident Fund popularly called EPF. Out of your basic salary, 12% is compulsorily deducted and added to your EPF account. Your employer makes an equal contribution. This money is managed by the EPFO and you earn interest on it.
Many citizens use the EPF to save for retirement. EPF offers an interest of 8.55% a year which is higher than PPF and NSC. Interest rate of PPF is 7.6% for April-June 2018. This is much lower than the EPF interest rate.
There’s good news… The interest rate on PPF and other small saving schemes like NSC will soon go up….With elections in a number of States like Mizoram, Rajasthan, Chhattisgarh, Madhya Pradesh and the General Elections in 2019, interest rates offered on small saving schemes will soon go up. The RBI has also hiked the repo rates and with interest rates expected to rise, even banks are hiking FD interest rates.
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The EPFO wants citizens to save for retirement. This is the very purpose of why you invest in the EPF. Many young people change jobs regularly and withdraw the EPF money, stating they are unemployed. This defeats the very purpose of the EPF, as the money is spent on Laptops and Smartphones.
1. EPFO proposes to introduce caps on the amount withdrawn before retirement
EPF wants its more than 5 Crore subscribers to be allowed to withdraw only 60% of their total savings or an amount which is equal to 3 months salary, whichever is lower if they withdraw before retirement. This is if a subscriber is unemployed for a month.
If a subscriber to the EPF is unemployed for three or more months, he can withdraw up to 80% of total savings or an amount which is equal to 2 months salary, whichever is lower.
Earlier, subscribers to the EPF could withdraw 100% of the money in the EPF, if they were unemployed for two or more months.
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2. How to withdraw EPF in a hurry?
If you are in a hurry to withdraw from the EPF (remember you must be unemployed for a certain time), this is the way to do it.
You select any one of these options and fill up the form. You then authenticate using the Aadhaar to finish the Online Claim Submission.
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