6 Benefits To Stay Invested In EPF And Not Withdraw It

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Employees managed to get the recent decision on withdrawal of EPF reversed, enabling them to withdraw their entire corpus, if they were without a job for 2-months. The government had restricted withdrawal to just the employer's contribution along with interest. This was later withdrawan after a furore by employee associations.

But, the question remains: Will they benefit if they withdraw the amount early?

The aim of government is to provide security to the employee during the old age. But, if the amount is used in your young age, you will be left with hardly anything in your old age.
The reasons for withdraw may be plenty, but, it would not be prudent to touch the EPF amount. An employee can avail personal loan, gold loan or a loan from company etc., as an alternative arrangement.

However, once you retire you will not be eligible for any of the loans. That time you can make the best use of the EPF amount.

Here are 6 reasons why you should stay invested in the EPF:

EPF pension

If you contribute without withdrawing the amount, the huge corpus can be used as your pension. Yes, if you complete a certain age criteria and employment conditions you will be entitled to pension from Employee Pension Scheme.

EPF insurance

Last year, the department Employees' Deposit Linked Insurance Scheme (EDLI) increased the insurance limit to Rs 6 lakh from the existing Rs 3.6 lakh. The nominee is eligible for a wage ceiling of Rs 15,000 every month, the maximum amount assured works out to be Rs 3.6 lakh.

3) Death benefits

Nominated person can claim for the funds in the event of the death of an employee. If the amount is sufficient it will financially help your family to cope with loss and other things.


EPF is entitled to Exempt, Exempt, Exempt (EEE) status. EPF is a tax-free instrument, but if you withdraw your EPF amount before 5 years, you will attract tax. Where EPF Association will deduct the TDS amount before final settlement.

Higher interest rate

EPFO has set the interest rate at 8.7 per cent for 2015-16, which is a good bet when compared to bank deposits or any other fixed deposit instruments.

Earn interest on dormant account

Now, individuals can earn interest on the dormant account. Earlier, if there was no contribution for 36 months in the account it was considered as dormant account and no interest was paid on the available amount.

Read more about: epf, provident fund
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