Employees' Provident Fund Has Issues. Can Employees Opt Out?
Mint Mumbai|November 25, 2024
EPF contributors face mounting challenges as limited withdrawal options and high rejection rates persist
Sashind Ningthoukhongjam
Employees' Provident Fund Has Issues. Can Employees Opt Out?

Savings are meaningless if you can't access the funds. When Dhairya Tanna, 33, tried to withdraw ₹3 lakh from his EPF account, the Employees' Provident Fund Organisation rejected his application. The chartered accountant wanted to withdraw some money to purchase his first house. Despite submitting all the relevant documents, he says his claim was rejected on the grounds of improper cheque image.

Last year, the EPFO rejected 24% of partial-withdrawal claims—Tanna's being one among 8.7 million rejected applications. EPFO rejected one in every three final settlements in 2023, according to the EPFO annual report. It was the highest in five years.

Tanna approached his company's human resources department to cut his EPF contribution, but his request was declined, as the company had a policy to deduct 12% of basic pay, plus dearness allowance for all staff. "I did not want to put money in EPF," said Tanna, who works in internal audit. "I want to invest in MFs as EPF rules are complex and withdrawal is an issue."

Compulsory contributions

By law, companies with more than 19 employees are required to register with the EPFO. The government uses a huge chunk of the money it gets through EPFO inflows to buy government of India securities, which in turn helps finance budget deficits.

Diese Geschichte stammt aus der November 25, 2024-Ausgabe von Mint Mumbai.

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Diese Geschichte stammt aus der November 25, 2024-Ausgabe von Mint Mumbai.

Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.

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