New Delhi: The Employees’ Provident Fund Organisation has withdrawn a special facility that allowed its subscribers to take out a part of their retirement savings as Covid advance, a move that comes nearly seven months after the World Health Organisation declared an end to Covid-19 as a public health emergency.
The retirement fund body announced its decision in a formal meeting with its officials a week ago, an EPFO official, who attended the meeting, told ET on the condition of anonymity.
“While a notification in this regard is yet to be issued, efforts are being made to disable the provision of non-refundable Covid advance in the software, so that subscribers can no longer apply for it,” the official added.
Experts say the move is expected to impact consumption as much of the Covid advance was being used for discretionary purchases and other expenses. They also said the decision has come too late and that it had impacted the availability of funds at EPFO’s disposal.
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“The facility of cash withdrawal from retirement savings has fuelled consumption but continuing the window for so long was not right. It has impacted supply of funds for EPFO, which could have been otherwise invested, indirectly affecting returns on EPFO investments for its subscribers,” labour economist KR Shyam Sundar said. A trade union leader, speaking on the condition of anonymity, said this is a clear reflection of laxity on the part of the bureaucracy.
“It took them so long to end the Covid withdrawal despite knowing that most of this withdrawal from one’s retirement savings was being used for purposes other than medical,” he said, adding that the burden on these beneficiaries have shifted to the future with reduced savings.
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Over 22 million-or more than one-third-of EPFO’s total subscribers had availed of the Covid advance in the three fiscal years starting from 2020-21, amounting to ₹48,075.75 crore, as per the EPFO’s draft annual report for 2022-23.
According to the report, the retirement fund body disbursed ₹17,106.17 crore in 2020-21, benefiting 6.92 million beneficiaries, ₹19,126.29 crore in 2021-22 to 9.16 million beneficiaries, and ₹11,843.23 crore to 6.20 million beneficiaries in 2022-23. The provision for Covid advance, which came into effect on March 28, 2020, saw 33 beneficiaries availing the facility in the four days till the end of FY20 (March 31, 2020), amounting to ₹0.06 crore.
EPFO has over 60 million subscribers and manages a corpus of more than ₹ 20 lakh crore.
The government had in March 2020 notified amendments to the EPF Scheme, 1952 to provide for non-refundable advance to EPF members not exceeding the basic wages and dearness allowances for three months, or up to 75% of the amount standing to a member’s credit in the EPF account, whichever was less, in the event of outbreak of an epidemic or a pandemic. This made all employees working in establishments and factories across India, who were members of the EPF Scheme, eligible for the non-refundable advance under the amended scheme, which came into effect on March 28, 2020.
