New PF Pension Rules: Withdrawing PF and Pension Money Before Retirement? Know These New Rules

New PF Pension Rules: The Provident Fund (PF) and pension are two of the most reliable pillars for securing one’s future after retirement. However, there are often times when we need money before retirement. Until now, there was a provision to withdraw PF and pension funds before retirement by following certain rules. But recently, some significant changes have been made to those rules, which every employee must know. The main objective of these changes is to further strengthen the retirement financial security of employees. Let’s get to know these new rules in detail.

New Rules for Provident Fund (PF) Withdrawal

The Provident Fund (PF) is a major savings vehicle for employees’ retirement. Previously, the entire PF amount could be withdrawn just two months after leaving a job. But now, a major change has been introduced to that rule.

• New Rule: Currently, if an employee leaves a job before the age of 58, they will have to wait for 12 months or one year to withdraw their PF money. Previously, this waiting period was only 2 months.
• Old Rule: Formerly, a claim could be made to withdraw the full amount from the PF account just 60 days or two months after leaving the job.
• Special Exemption: However, there is an exception to this rule. If an employee is 56 years of age or older, they will not have to wait for these 12 months. They can withdraw the money after two months as per the previous rule.

The main reason for this change is that in many cases, employees easily withdraw their PF money when changing jobs or for other reasons, which weakens their long-term financial security. This new rule will encourage employees to preserve their savings.

Historic Change in Pension Withdrawal Rules

The change made to the pension rules is, in a word, revolutionary. This rule is primarily applicable to those employees who have completed more than 10 years of service.

• New Rule: If an employee leaves their job after completing 10 years of service, they will no longer be able to withdraw the money deposited in their pension account. They will be mandatorily brought under the pension scheme and will start receiving their pension only after reaching the age of 50.
• Old Rule: Previously, even after completing 10 years of service, employees could withdraw their pension money along with their PF money, which was possible through a ‘Scheme Certificate’.
• Benefit: A major advantage of this rule is that if the employee joins a new job, their previous pension service period will be added to the new job’s service period. This will increase their total service tenure, and they will receive a larger pension amount after retirement. This method will ensure long-term pension benefits for employees.

Purpose and Outcome of the Rule Changes

The primary goal of these rule changes is to increase the social and financial security of employees. The government’s intention is that employees should not break their long-term savings for minor needs and can lead a dignified life after retirement.

• Financial Security: The new rules will help protect the PF and pension funds of employees, providing them with financial certainty in their old age.
• Long-term Benefits: The rule of not allowing pension withdrawal will provide employees with long-term pension benefits. The pension amount will also increase as the service period is cumulative.
• Increased Awareness: This change will increase awareness among employees about their retirement savings, and they will be able to plan their future more effectively.

Therefore, if you are an employee, it is extremely important for you to be aware of these new rules regarding PF and pension. Be sure to keep these points in mind when doing your financial planning.