In a shocking revelation, over more than Rs. 30,000 crore has been withdrawn in four months i.e from April to July by 8 million subscribers of the Employee Provident Fund Organisation (EPFO). Reportedly, the EPFO has a collection of Rs 10 lakh crore based on mandatory contributions from nearly 60 million salaried people and their employers.
But, this huge outgo will have a huge impact on the fund's earnings in FY21, officials said.
Notably, the amount withdrawn between April and the third week of July is much more than the usual outgo seen over similar periods, and that pandemic-related job losses, salary cuts, and medical expenses explain this substantial increase, EPFO officials said.
“Of the total withdrawals, nearly 3 million beneficiaries withdrew upwards of Rs 8,000 crore under the Covid window while the rest Rs 22,000 crore was a general withdrawal by 5 million EPFO subscribers, mainly as medical advance,” an EPFO official said.
A special Covid window for withdrawals was announced by finance minister Nirmala Sitharaman soon after India declared a nationwide lockdown on March 22 to contain the spread of the pandemic. The Finance Investment and Audit Committee (FIAC) of the retirement fund body updated its members on withdrawals at a virtual meeting held last week, people familiar with the deliberations at the meeting informed news agency.
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Officials said the full impact on returns of this large withdrawal will be known after “detailed micro-level analysis”.
“With Covid cases on the rise, the number of withdrawals is going up faster,” a top government official said.
Going by the current trend, EPFO expects nearly 10 million subscribers to withdraw from their savings in the coming days.