COVID-19: Workers tap EPF savings to tide over financial needs

Job loss and pay cuts have forced thousands of workers to dip into their EPF savings.

Job loss and pay cuts have forced thousands of workers to dip into their EPF savings.   | Photo Credit: M.A. SRIRAM

Job loss and pay cuts have forced thousands of workers, mainly in the private sector, to dip into their accumulated savings through the mandatory contribution to the Employees’ Provident Fund (EPF) account, to tide over immediate financial emergency.

The Employees’ Provident Fund Organisation (EPFO) made a special provision facilitating account holders to make a withdrawal up to three months of basic pay plus DA or up to 75% of the amount in the member’s account, which ever was lower.

This measure — allowing members to dip into funds in their EPF account and which is non-returnable — has been introduced to fight any exigency as a fallout of the COVID-19 pandemic. Feedback from various EPFO offices across the State indicate that people in the private sector — who have suffered job loss or pay cuts — are increasingly opting for this option to meet any emergency.

The Regional Provident Fund Office in Mysuru, whose jurisdiction covers the districts of Mysuru, Mandya, Chamarajanagar, and Kodagu, settled 8,789 COVID-19 claims from April 7 to June 22, 2020. A communique from the Regional Provident Fund Office in Mysuru stated that amount disbursed as on June 22 was ₹23.15 crore and the non-returnable advance was disbursed within three days from the date the claims were raised by the members.

The Hubballi office, which has jurisdiction over Dharwad, Haveri, Uttara Kannada, Gadag, and Belagavi, received 8,392 requests during the same period and they were settled within three days. The Hassan office of the EPFO, which covers Hassan and Chikkamagaluru districts, saw 1,951 members raising a demand and ₹5.35 crore being disbursed as on June 22.

The measure has been termed timely by those who have availed themselves of the facility and were staring at a financial emergency. A case in point is that of Shivashankar (name changed) of Mysuru, an employee in a private establishment who has taken a pay cut. The reduction in the net salary diminished his ability to meet the recurring cost of medicine for one of his family members. “But I have dipped into my EPF savings and built a buffer to last for nearly a year by when things will hopefully take a turn for the better,” he said.

Comes in handy

In case of Imtiaz Ahmed of the city, an employee in a private company, pay cut and unforeseen expenses had stalled his property registration process as he ran out of funds. “The corpus set aside for property registration evaporated during the pandemic and the deal was threatening to get derailed but the EPF advance came in handy,” he added.

For many who have faced job loss, the EPF advance has come in as a reprieve, even though it is for a temporary period.

“The amount, in case of KYC–compliant members whose Aadhaar number was validated and seeded with their EPFO account, was released and credited to their bank accounts within 72 hours,” said local officials.

In a bid to highlight the facility introduced by the government, the EPFO office also issued advertisements in local newspapers so as to reach out to maximum number of people. In view of the imperatives of ensuring social distancing and to minimise congregation and crowding at the EPF offices, the authorities introduced COVID-19 claims settlement through auto mode in case of such members whose accounts were fully KYC compliant.

For filing COVID-19 claims, visit www.epfo.gov.in or download UMANG app.

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Printable version | Aug 8, 2020 9:10:55 AM | https://www.thehindu.com/news/national/karnataka/covid-19-workers-tap-epf-savings-to-tide-over-financial-needs/article32047253.ece

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