Business Desk, Etv Bharat: Low-wage salaried workers in India are using their retirement corpus in order to deal with the financial crunch owing to the coronavirus-induced slowdown in the economy.
According to a press release issued by the labour ministry on Tuesday, the Employees' Provident Fund Organisation (EPFO) has settled over 94.41 lakh fund withdrawal claims during April-August 2020, which is around 32% higher compared to the corresponding figure of last year.
Through these claims, EPFO disbursed about Rs 35,445 crore to its members during the period, which is just around 13% higher from a year ago.
Notably, 55% of the claims settled during April-August 2020 were related to the recently introduced Covid-19 advance. To recall, the government in April had made a provision for a non-refundable advance facility under the Pradhan Mantri Garib Kalyan Yojna (PMGKY).
Members could use this facility to withdraw three months’ basic wages -- basic pay plus dearness allowance -- or half of the total accumulation in his or her EPF account (whichever is less) for meeting exigencies due to the COVID-19 situation.
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Another 31% of the advances settled during the April-August period pertained to illness claims, according to the labour ministry.
Now, wage-wise analysis highlights that almost 75% of Covid-19 advances and roughly 79% of illness related claims were settled for PF subscribers belonging to wage slab of less than Rs 15,000.
“Timely availability of PF advances prevented many low-wage earners from falling into debt, providing social security support to the weakest section of workforce during these adverse times,” the labour ministry noted in the release.
Significant jump in partial withdrawals
In a worrying sign, total number of partial withdrawal claims have more than doubled, with data reflecting about 212% growth for the period of April-August 2020 as compared with a year ago.
However, there was a significant decline of about 35% in the number of final PF settlement claims during the period as compared with April-August 2019. Final PF Settlement claim allows members to fully withdraw their PF balance after quitting their job, superannuation, termination or at the time of retirement.
“Members have shown greater trust in EPFO by not opting for final withdrawal or closure of account instead choosing to apply for PF advances to meet their financial needs,” the statement said.
Timely claim settlements
The government also attributed higher number of claim settlements during the period to the new ‘auto mode of settlement’ introduced for both Covid-19 advances and illness-related claims.
Auto mode of settlement reduced the claim settlement cycle to just 3 days for most claims in these two categories against the statutory requirement to settle claims within 20 days, according to the release.
“With EPFO settling advance claims within 3 days, PF accumulations are now seen as liquid assets that can timely meet the need of the subscribers during crisis,” the labour ministry noted.
Notably, EPFO has more than 6 crore subscribers, 66 lakh pensioners and 12 lakh employers under its ambit.
