35 Million Employees Withdraw Their PF Money Amid COVID-19 Crisis

Owing to the misfortune brought by the deadly coronavirus, more than 35 million workers, i.e., more than half of the provident fund subscribers, have withdrawn funds from their retirement savings since 1 April 2020. The count of Employees’ Provident Fund Organisation (EPFO) subscribers approximately stands at 60 million.

35 million workers have withdrawn funds worth Rs 1.25 lakh crore from their provident fund accounts. This amount comprises settlements against pension, provident fund, death insurance and transfers. EPFO has settled claims worth Rs 81,200 crore in FY19 to around 16.37 million subscribers. The data concerning FY20 is still not available.

The maximum number of claims came from Pune, Mumbai, Bengaluru, and Delhi. In addition to these cities being industrial and services hubs, they also had the highest COVID-19 cases. The percentage of year-on-year withdrawals/claims are 10% higher, not only due to retirement exits and switching of jobs and additional COVID-19 withdrawals. Many workers lost their jobs due to the pandemic; they were forced to withdraw their provident fund money to meet their financial needs.

Last year, the government allowed EPFO subscribers to either withdraw an equivalent of 75% of their accrued funds or three months of basic pay — whichever amount is lower. This one-time non-refundable advance amount was introduced to help subscribers meet their financial requirements during the testing times of the pandemic. EPFO has been settling claims via auto settlement in less than 72 hours of receiving the application to lessen the financial burden of subscribers.

For any clarifications/feedback on the topic, please contact the writer at bhavana.pn@cleartax.in

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