The Employees’ Provident Fund Organisation (EPFO) has raised the withdrawal limit from Rs 50,000 to Rs 1 lakh.
- The withdrawal limit was increased to reflect changing consumption patterns, with the previous cap of Rs 50,000 no longer sufficient to cover common expenses like medical treatments and weddings.
- Emergencies such as medical treatment, education, or family needs are typically accepted by the Employee Provident Fund Organisation (EPFO) for withdrawal.
- Provident funds are a crucial source of retirement income for over 10 million employees in the organised sector and are often the main savings option for many workers.
- The EPFO currently offers an interest rate of 8.25% for FY24.
- Under the Employees’ Provident Funds and Miscellaneous Provisions Act of 1952, companies with 20 or more employees must contribute to provident funds.
- Both the employee and the employer contribute 12% of the employee’s salary each if the employee earns Rs 15,000 or less (basic salary) each month. However, the employer’s contribution is divided into two parts. 8.33% is allocated to the Employee Pension Scheme (EPS) while the remaining 3.67% goes to the provident fund.
- Opening an EPF account compulsory for employees earning a salary of Rs. 15,000 or less, although individuals at any income level can opt for it voluntarily.
