The Employees’ Provident Fund Organisation (EPFO) is expected to increase the auto-settlement of advance claims (ASAC) limit by fivefold, from Rs 1 lakh to Rs 5 lakh, in order to streamline the process of claim settlement for PF account holders, according to a report.
Last week, Sumita Dawra, Secretary, Ministry of Labour and Employment, approved the proposal to enhance the limit from Rs 1 lakh to Rs 5 lakh, news agency ANI reported, quoting sources. The government’s move is likely to benefit 7.5 crore EPF subscribers by enhancing ‘ease of living’.
Sushri Shobha Karandlaje, the Union Minister of State for Labour and Employment, recently said that 60% percent of advance claims are currently handled automatically.
EPFO auto-settlement limit increase: What does this mean?
With an increase in the auto-settlement limit, the members can now automatically withdraw up to Rs 5 lakh instantly. Earlier, members had to wait for manual verification for advance withdrawal of amounts above Rs 1 lakh.
In case of medical emergencies or urgent situations like home renovation and higher education, the funds can now be automatically approved.
Also, since it is an auto-settlement, the subscribers don’t have to visit the EPFO offices or wait for manual approvals, making the process hassle-free. This scheme will benefit people who have high PF savings and need to withdraw funds urgently.
If you are looking for emergency funds, apart from EPFO advance withdrawals, a personal loan could help meet financial needs. You can access multiple loan offers through online lending platforms like Moneycontrol to avail quick funds. Moneycontrol has partnered with eight lenders to offer fast, fully digital loans up to Rs 50 lakhs. The application process is easy to follow: enter your details, complete the KYC verification, and choose an EMI plan. Interest rates start as low as 10.5% per annum, depending on your employment status.
How to increase the EPFO limit?
The limit for EPFO will be increased automatically; there is no need to visit any office or do it manually. EPF subscribers need to fulfill certain requirements to maximise their eligibility for withdrawals.
The first step is to make sure that the KYC is updated. All documents such as Aadhaar, PAN and Bank account are linked to the EPF account. An EPFO member can’t withdraw the total balance of the provident fund corpus before retirement. A partial withdrawal is only under certain conditions.
In case of a medical emergency and retirement, an EPF subscriber can withdraw 100% of the balance amount. When it comes to marriage or education, the withdrawal limit is 50% of employee contribution, and in the case of a home renovation or construction, the withdrawal limit is capped at 90% of the balance amount.
With the new Rs 5 lakh limit for advance withdrawal, if the amount is within the approved threshold, the EPFO will process it automatically without manual approval.
There are times when an urgent need arises for funds exceeding Rs 5 lakh. In case of urgent funds, a personal loan can be a good alternative. Here’s how.
Personal loans as an alternative to EPFO advance
When it comes to substantial amounts, more than Rs 5 lakh, a personal loan is a better option because it can be processed in a day or two. EPFO takes several days for such an amount because it requires manual approval and the process is not instant. Withdrawing from an EPF account reduces retirement savings, so opting for a personal loan could be a better choice if you want to preserve your funds. While EPF withdrawals don’t require a credit score or repayment. in urgent situations where immediate funds are needed, a low-interest personal loan could be a better alternative.
Moneycontrol has partnered with eight lenders to offer personal loans up to Rs 50 lakhs in a completely digital process. The application process is easy and it ensures quick disbursement. Interest rates start at as low as 10.5% per annum.
Conclusion
The EPFO members now access their PF savings more quickly and easily in an emergency after the government rolls out the facility for the auto-settlement of advance withdrawals up to Rs 5 lakh. The new system makes life much easier for the 7.5 crore EPFO members, with 95% of claims being settled in three days. However, a personal loan is a sensible option when urgent cash exceeding ₹5 lakh is needed. EPF withdrawals have limits and may have an impact on retirement funds, even if they provide simple access to savings without lowering credit scores.
Personal loans, on the other hand, have interest rates and repayment terms but can quickly give bigger amounts. The decision is ultimately based on the urgency, required amount, and desire to maintain your retirement funds over time.
Source: www.moneycontrol.com
