Government rolls back restrictions on withdrawal of provident fund.
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The government on Tuesday announced a complete and unconditional rollback of new norms that barred employees from withdrawing their provident fund corpus before retirement, over a month after it scrapped the Union budget proposal to tax employees provident fund savings at retirement.
Labour and Employment Minister Bandaru Dattatreya, who on Monday said the new rules would be partially relaxed and their implementation deferred, announced the climb-down on Tuesday evening, minutes after his Ministry reiterated Monday’sdecision in a statement.
Protests against the new norms that started in Bengaluru on Monday turned violent on Tuesday, prompting Union Labour Secretary Shankar Agarwal to assess the situation with the PF Department by afternoon. Thereafter, Mr. Agarwal recommended that the Minister announce a complete rollback. “We are cancelling the February 10 notification [restricting complete withdrawal of PF savings] and the old system will continue. This was a demand of the workers and I have announced the roll-back in their interest,” Mr. Dattatreya said.
He said the decision would soon be ratified by the trustees of the Employees’ Provident Fund Organisation (EPFO) soon.
Under the rules notified in February, employees were not allowed to withdraw their entire PF amount if they had quit or lost their present jobs, making it mandatory for them to wait till 58 years of age for a final settlement. Following initial protests from workers, the Ministry deferred the implementation of the rules from April 1, 2016 to May 1.
While deferring this by another three months on Monday, the Minister said the norms would be relaxed to allow employees buying a house, getting a child married and pursuing professional education and healthcare to withdraw their entire PF savings. A similar exemption was granted to employees who join a government organization.
In a statement on the rollback, the Ministry explained that the new norms were aimed at ensuring that employees didn’t fritter away their retirement savings during their working life and spend their old age in penury. “The objective was to provide a minimum social security to the workers at the time of retirement. It was noticed that over 80 per cent of the claims settled by EPFO belonged to pre-mature withdrawal of funds, treating the EPF accounts as savings accounts, and not a social security instrument,” it said.
“In order to address the issues, the amendment stated above was carried out with the consent of trade unions and with the intention of promoting a decent accumulation of provident fund for the members at the end of their working lifetimes,” it said.
EPF accounts are mandatory for firms hiring at least 20 employees and are funded by employees paying 12 per cent of their salary with a matching contribution from employers.
Under the norms that now stand reversed, employees could withdraw their own share of PF savings along with the interest on them. The balance, comprising the employer’s contribution, was to be withheld by the EPFO till the employee attained 58 years of age.
Source : www.thehindu.com