Dec 5, 2000|
EPF: Donít fall for the bait
There has been a spurt in withdrawals from the Employee Provident Fund (EPF) account. This has happened on account of government relaxing the norms for withdrawal from the account for housing purpose. This is an alarming trend and if it continues it may even affect the essential objective of this account: providing a social security net for the salaried class.
If the trend continues unabated, the salaried class may be left with little or no balance in their Provident Fund (PF) accounts at the time of retirement. This would mean they would have to depend on pension for sustenance.
It is to be noted here that the government relaxed the norm in February this year. Under the relaxed norms only a mere declaration that the amount sought to be withdrawn was for house construction purposes was sufficient. No documents to support the declaration were needed. This opened the floodgates for withdrawal from the PF account.
Apparently, in the South, members have been withdrawing money from their EPF accounts to meet other expenses and the relaxed norms is acting as a temptation. In many of the cases the entire outstanding in the accounts has been wiped off.
Everybody has some financial need in life to take care of. But one should ensure that the EPF account is treated as sacred. The saving in the account is for serving a specific purpose of meeting the need of members in their retired life. There are a lot of things one needs to take care of during oneís retired life: maintaining a certain standard of living, emergency on account of health and many more. The saving in the EPF helps meet these expenses. Added to this is the 12% tax-free return, which is better than other comparable investment avenues in the market. So, restrain yourself from withdrawing from your EPF account. After all the EPF is serving two key objectives - social security and better risk adjusted returns.
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