How to Withdraw Money from the EPF Account

EPF or employee provident fund is a savings scheme for private-sector employees similar to pension scheme for government employees. Any company which has over 20 employees has to register with EPFO (employees provident fund organisation) mandatorily. Under this investment scheme, both employee and employer make a monthly 12% contribution. While the employee’s full contribution goes towards the provident fund, the employer’s contributes is divided between 3.67% for EPF and 8.33% for EPS.

The interest on the fund is calculated on an annual basis at a rate of 8.75%. This interest rate may be revised every year jointly by the Government of India and the board of trustees. Withdrawal from the accumulated amount in the employee provident fund is only allowed after a period of 5 years subject to end-use restrictions, and this amount is exempted from tax. Apart from this, one should also know about the other features of EPF to gain a proper idea about it.

How to withdraw from your EPF account
The amount in the EPF account is available to the account holder if he or she has retired or is unemployed. For a hassle-free withdrawal process, they can opt for PF online withdrawal process through the UAN member portal.

To carry out the PF online claim process, an individual must have the following –

• Active UAN number.
• Bank details should be linked with UAN.
• PAN and Aadhaar should also be linked with EPF account.

Go through the steps below to understand how to withdraw funds from EPF account –

• Visit the UAN member website and login with your UAN and password.
• Select ‘claim’ from a drop-down menu on website.
• Verify your member details and select yes to sign the certificate of undertaking.
• Click on proceed for online claim. Select PF advance or Form 31.
• You will need to provide reason/purpose for withdrawal, employee address, and amount required.
• Furnish the above details and submit your claim application. You will also have to provide documents required at this stage.

The amount will be credited to your bank account after the claim has been processed.

Features of EPF

1. One can avail a life insurance cover under the employee provision fund.
2. Provisions have been made under Voluntary Provident Fund so that an employer can make an additional contribution over the compulsory 12%.
3. Partial withdrawal from the EPF account is allowed after 5 years only for specific instances such as a wedding, expenses incurred in medical treatment, unemployment, down payment for the purchase of a residence.
4. On the demise of the account holder, the amount in the EPF will be handed over to the nominee.

You can avail the full amount from your employee provident fund account on your retirement. After retirement, you can invest the whole amount in a fixed deposit account to increase your retirement savings. However, there are two different types of fixed deposits which generate different interest amount. The two fixed deposit accounts are –

Cumulative fixed deposit – This is suitable for those who do not wish to avail interest regularly and wants a substantial amount on maturity. In this case, interest is compounded every year but paid only at the end of the tenor period along with the principal amount. Accordingly, one can earn a substantial interest amount compared to non-cumulative fixed deposit.

Non-cumulative fixed deposit – If you opt for a non-cumulative fixed deposit, you can choose to earn interest at regular intervals. The interest is compounded on a monthly, quarterly, half-yearly or yearly basis and paid out to depositors as per their convenience. It is suitable for those who wish to have a regular income from their fixed deposit.

One can also use a fixed deposit calculator to calculate approximate interest pay-out and the maturity amount that he or she will earn under different types of fixed deposits. It will enable them to frame and streamline their finances accordingly.

Fixed deposit calculator is an online tool available online or on the website of your financial institution or NBFCs like Bajaj Finance. One can go through the steps below to know how to use this online tool properly.

• Visit your financial institution’s website.
• Choose the customer type such as existing customer, new customer or senior citizen. It is because the interest rates vary according to the customer type.
• Select the fixed deposit type you want to opt for –cumulative FD or non-cumulative FD.
• Next, put in the fixed deposit amount and desired maturity period.
• The calculator will display the maturity amount and interest pay outs after entering all the above information.

The process to withdraw PF online is hassle-free and straightforward. One also doesn’t need to wait for approval from their employer to withdraw funds if they have linked UAN and Aadhaar to their EPF account.

Author Bio:
Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at HighlightStory