NEW DELHI: Bowing to pressure from trade unions, the government has set aside the controversial provident fund (PF) withdrawal norms that had restricted complete withdrawal from PF account before the retirement age of 58 years.
This is the second major stepback by the government on provident fund in less than two months and comes close on the heels of it withdrawing the budget announcement of imposing tax on withdrawal from Employee Provident Fund (EPF) account.
"The withdrawal restriction imposed under the EPF scheme was at behest of trade unions but now since they don't want it we have withdrawn the notification dated February 10," labour secretary Shankar Agarwal said on Tuesday. He said the restriction was in favour of workers, many of them being ignorant and poor with pressing needs at some point of time. "Since the government is not contributing anything to workers' PF, we have decided not to restrict its withdrawal." The U-turn has come after labour minister Bandaru Dattatreya, earlier in the day, relaxed the withdrawal norms and deferred the implementation of the February 10 notification by three more months till August 1.
The complete rollback comes in the midst of protests by labour unions in several parts of the country against the bar on withdrawing employer's contribution. People have also launched online campaign against the decision, which was to be implemented from February 10 but was later put on hold till April 30. Police had on Monday resorted to lathicharge in Bengaluru to disperse a crowd of garment factory workers protesting against the amendment to the EPF Act.
The February 10 notification had restricted the withdrawal of employers' contribution of 3.67% and interest earned on it under the EPF scheme till retirement or 58 years instead of 54 years earlier.
The move drew flak from trade unions and workers. Under the existing rule, employees can withdraw the full PF balance if he or she is out of employment for continuous 60 days. That includes 12% employees' contribution, 3.67% contribution from the employer and interest earned on this in any given year. However, the 8.67% of the employers' contribution to pension under the EPS cannot be withdrawn, thus restoring the original withdrawal provisions under the EPF scheme.
The move has been welcomed by trade unions. "We have always maintained the PF corpus is workers' money and hence he should be given the flexibility to withdraw it as and when required," said Pawan Kumar of RSS-affiliate Bharatiya Mazdoor Sangh (BMS).
D L Sachdeva of All India Trade Union Congress (AITUC) said the unions had never demanded any restriction on PF withdrawal. "Workers should be given an option whether to withdraw or retain his PF till his retirement and nobody should force anything on them," he said.