New Delhi: Confronted by protests – including a riot in Bengaluru that saw buses and police jeeps set on fire – the government has cancelled controversial new rules on when you can withdraw money from your provident fund, which serves as a savings plan for when salaried workers retire.
Here is your 10-point cheat-sheet to this story:
1) In February, the government said that to claim or withdraw what your employer has deposited for you, you must wait till you turn 58 (the age limit was earlier 54).
2) That rule has been cancelled today. “Workers are now allowed to withdraw the entire amount from the provident fund as per existing provisions of the EPF Scheme 1952 including the employers’ share of 3.67%,” said a statement on behalf of Labour Minister Bandara Dattatreya.
3) Once you are hired at a company which has at least 20 employees, a portion of your salary with a matching amount from your employer is automatically deposited in an account that earns interest.
4) Barring some exceptions, to withdraw the entire amount you have contributed, you need to be 58, which is the official retirement age in India. Partial withdrawals are permitted for buying a home or funding a child’s education, for example.
5) Many labour unions objected to the new rules saying that workers in some sectors -garment factories, for example – are unsure of being employed after they turn 50; so making them wait till they are 58 (the official retirement age) to collect what employers have contributed for them does not make sense.
6) In Bengaluru, thousands of garment factory workers set buses on fire and clashed with the police on major highways on the outskirts of the city.
7) In his Union Budget presented in February, Finance Minister Arun Jaitley announced that 60 per cent of the amount in your provident fund would be taxed when the account was emptied out or when you cashed in what you had saved.
8) After outrage from the middle class, that plan was cancelled.
9) Now, the government is considering whether you should be allowed to withdraw the entire savings accumulated in your provident fund for a fixed set of criteria like medical treatment for a serious illness, a home purchase, or the education or marriage of an employee’s children.
10) Workers who have been unemployed for two months have till the end of July to claim the entire amount accrued in their provident fund.