EPF Withdrawal Facility: Even though the government has given this facility in view of the epidemic, but there can be a big loss in the long term on withdrawal from PF account.
New Delhi. In view of the pandemic, the Employees’ Provident Fund Organization has once again given the facility of withdrawal to its subscribers through the EPFO website or UMANG App. Under this, EPFO subscribers can withdraw 75 percent of the amount deposited in their account or an amount equal to three months’ basic salary and dearness allowance (whichever is less).
Investment Advisor Sweety Manoj Jain says that even though the government has given this facility in view of the epidemic, it should be used only as a last option. Withdrawal from PF account can cause big loss in the long term. She says that in this hour of crisis, if you withdraw one lakh rupees from your PF account, then according to the annual interest rate of 8.50 percent, your retirement fund will reduce by Rs 11.55 lakh in 30 years. The more you withdraw from the account, the retirement amount will decrease accordingly.
Understand the math of withdrawal like this
Suppose, you have Rs 10 lakh in your account and your basic salary is Rs 50,000. In such a situation, you can withdraw an amount equal to three months’ salary i.e. 1.5 lakh rupees. If the total amount deposited in the account is Rs 2 lakh and your basic monthly salary is Rs 51,000, you can still withdraw only Rs 1.5 lakh. Here the total monthly salary for three months will be Rs 1.53 lakh, while 75 percent of the total deposit i.e. Rs 2 lakh will be Rs 1.5 lakh. Whichever is less of these two, you can withdraw the same amount i.e. 1.5 lakh rupees only.
Make a voluntary contribution to avoid loss
Investment advisor Balwant Jain says that withdrawal from PF is not a wise decision. If withdrawal is the last option and you do not want to suffer loss, then you should make a voluntary contribution to the PF account. By doing this, the amount you have withdrawn will be reimbursed in a short time.
…then there will be big losses in the long run
He explains that withdrawal from PF account should be the last option, otherwise there can be a big loss in the long term. This will affect the amount received after retirement. In such a situation, it would be better to choose other options to meet the financial needs in crisis. For example, you can avoid withdrawal from PF account by taking a loan from a knowledgeable person, taking a personal loan, withdrawing from credit card, gold loan and top-up home loan etc.
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