The Employee Provident Fund regulations revised and have undergone several changes recently. From increasing the equity investment to allowing employees to withdraw the entire corpus in case of a job loss and a likely lower contribution by employer and employee. These changes offer flexibility for subscribers with regard to withdrawal and a potential for the fund to earn higher returns. But it could also mean higher variation in the fund performance. We take a look at these changes and how they will impact you.
There is a proposal to lower the contribution to the EPF so as to leave more money in hands of an employee. What will be the implication of this?
EPF is a product designated for creating a corpus for retirement. It is in place from the year 1956. But it caters to the organised sector only. The unorganised sector is much bigger than organised sector and is largely not sensitised about retirement planning. The EPF enjoys generous tax breaks, a safe haven status, as well as, is bounded by regulations, but the real reason it exists – that it is a retirement product is a secondary knowledge.
There is a greater need of emphasising the requirement of retirement planning, which will require realistic retirement goal setting. It is far more important for the EPFO to focus on defining the actual need for retirement kitty, rather than focusing on populist measure of lower contribution.