Provident Fund Account is a savings account as well as a retirement fund. However, employees withdraw money from this account from time to time. Perhaps, few people know that repeated withdrawals from PF account also reduce retirement funds. According to EPFO, people withdrew most funds during the COVID-19 period. More than 7.1 million people closed their EPF accounts. It is very important to know how much retirement funds are reduced when money is withdrawn from the PF account.
According to Retired Assistant Commissioner of EPFO AK Shukla, if you are 30 years old and have 30 years left till you retire, and if you withdraw Rs 1 lakh from your EPF account, it means that Rs 11.55 lakh will be reduced from the amount from the retirement fund at the age of 60.
According to Ak Shukla, PF may be your saving, but it is for after the age of 60. That's why it's called a retirement fund. You should not withdraw PF money unless you have a financial crisis or is not very important. At present, the EPF account is getting 8.5 per cent interest. This is the highest interest compared to small savings. That's why more people also put voluntary money into EPF account. The more you invest in EPF, the more interest you will benefit from. However, the budget for 2021 has now brought the interest on investments above Rs 2.50 lakh under the tax net. But, still, investment in it has its own advantage.
How much money gets cut?
According to EPFO, 12 per cent of the job's salary is credited to the PF account every month. The same part is credited to the employee's account PF employee. Money is deposited in two parts in the EPF account. The first is deposited in the PF and the second part is of pension. The pension deposits 8.33 per cent of the employer's contribution, with a maximum limit of Rs 1250 at present. Get compounding interest on money deposited in PF. EPFO rules suggest that EPF money can be withdrawn even before retirement. However, some of its conditions have been fixed.
