Employees’ Provident Fund is a social security scheme that was designed to create a corpus of money for the use of an employee after retirement, when income stops, but unfortunately, expenditure doesn’t. It draws 12% of the basic + DA (dearness allowance) from an employee’s compensation every month and deposits it in an EPF account. A matching amount is taken from the employer too every month. However, only 3.67% is put in the EPF account and 8.33% is put in an account (known as EPS) from which pension is paid to the employee, and/or his/her survivours every month.
A really useful aspect of EPF is that it allows an employee to withdraw money for his/her EPF account in case of extraordinary circumstances. These can be buying a house/apartment, marriage of one’s children or funding the expenditure of higher education etc. One of the less-known situations for which premature withdrawals from EPF account is allowed is natural calamities. Let’s know what are the rules governing this situation.
EPF advances in natural calamities
The rules have explicitly stated under what conditions can one withdraw money is struck by natural calamity. The rules are contained in para 68L of The Employee’s Provident Fund Scheme 1952 states that the commissioner or an officer authorised by the commissioner can sanction such withdrawals. The para states, “The Commissioner [or where so authorised by the Commissioner, any officer subordinate to him] may, on an application from a member whose property, movable or immovable, has been damaged by a calamity of exceptional nature, such as floods, earthquakes or riots, authorise payment to him from the provident fund account, a non-refundable advance of [rupees five thousand] or fifty per cent of his own total contribution including interest there on standing to his credit on the date of such authorisation, whichever is less, to meet any unforeseen expenditure.”
A necessary condition for withdrawal
The most important point that one should note is that the relevant state government must have declared that “the calamity has affected the general public in the area”. One cannot just approach the EPFO to withdraw money unless that declaration has been made.
The rules say, the EPFO member has to furnish “a certificate from an appropriate authority to the effect that his property (movable or immovable) has been damaged as a result of the calamity”. Another point to note is that there is a time limit for an affected person to submit the application for withdrawal of money. “The application for advance is made within a period of 4 months from the date of declaration,” the rules state.
The Employees’ Provident Fund was set up in 1952 as one of the first social security schemes in independent India and has been valued by all categories of employees. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
