EPFO may allow withdrawals for down payments on home loans
16 March 2017
Retirement fund body Employees Provident Fund Organisation (EPFO), which earlier expanded the funds exposure to the securities market, including a fund comprising public sector stocks to aid the government's asset sale plan, will now help push the government's ''housing for all'' initiative.
EPFO now plans to amend the norms for withdrawal of funds by subscribers of Employees Provident Fund (EPF) scheme to allow them use the corpus for down payment in housing schemes and also for paying EMIs on home loans.
However, under the proposed provision in the EPF scheme, EPFO subscribers would have to form a cooperative society with at least 10 members for availing the facility or should be building his or her own home.
The labour ministry, which controls the EPFO, informed the Rajya Sabha on Wednesday that it intends to amend the law to allow subscribers to withdraw up to 90 per cent of their savings to buy or build homes.
EPFO subscribers will also be able to pay their home loan EMIs (equated monthly instalments) using regular EPF accumulations.
''A member of Employees' Provident Fund being a member of a co-operative society or a housing society having at least 10 members of EPF, can withdraw up to 90 per cent from the fund for purchase of dwelling house/flat or construction of dwelling house/acquisition of site,'' labour minister Bandaru Dattatreya told the Rajya Sabha in a written reply.
The minister said the central government has ''already taken a decision for modification in the Employees' Provident Funds (EPF) Scheme, 1952'' for effecting the change.
EPFO has some 37.6 million active subscribers and manages a corpus of over Rs8,500,000 crore.
In January, it invested Rs2,800 crore in the central public sector enterprises exchange traded fund (CPSE-ETF), comprising stock in 10 state-owned companies, to help in the government's divestment plan. It marked the first time that the EPFO participated in the government's divestment plans.
The proposals are yet to get EPFO's final nod as allowing withdrawal of 90 per cent of retirement savings to pay for a home will change the structure of the EPFO as a retirement fund body and possibly deplete its funds.
The Central Board of Trustees (CBT) of the EPFO is meeting on 30 March at wich a final decision is expected to be taken.