HomeLAWS & SCHEMESHidden PMRPY Rule Stops Your PF Pension Withdrawal

Hidden PMRPY Rule Stops Your PF Pension Withdrawal

To begin with, let us tell you a short story. Take for an instance that there is an apparel store with an employee called Shyam. Shyam’s employer deposits his salary into his bank account each month. Shyam can withdraw this money out via his ATM card. One day a government official comes to the apparel store owner and asks him to let them deposit Shyam’s salary in the bank for one month. The store owner is asked to hire more employees and the government would deposit their salaries for one month as well. The store owner is fine with this arrangement.

Now when Shyam tries to withdraw his money he is unable to do so. So he runs to the Bank and asks for their help. But the Bank says that Shyam can only withdraw this money once he turns 58 years old because it was deposited by the government. Shyam, who is 28 years old currently, has to wait another 30 years to withdraw his money. Not only this, but the remaining salary deposited by his employer is also withdrawable only after he turns 58 years. This is exactly the case which is going to happen with the PF pension withdrawal of about 1 crore Indian citizens

We came across this situation when he heard the story of Jeevan Ram. Jeevan Ram applied for his PF withdrawal in January 2019. PF withdrawal has two types of withdrawal options – PF and Pension. The 15.67% PF withdrawal is possible via Form 19. Similarly, the 8.33% Pension withdrawal is possible via Form 10C. Pension withdrawal is only possible until your cumulative service period is below 9.5 years. So Jeevan Ram applied for both PF and Pension withdrawal online. He received his PF amount but not his pension amount. So he went to the PF office and asked why his pension claim was rejected. The PF officer said that it was rejected because Jeevan was already registered for PMRPY. 

What is PMRPY?

Pradhan Mantri Rojgar Protsahan Yojana (PMPY) was announced on 7th August 2016. It is regulated by the Ministry of Labour and Employment through the Employees’ Provident Fund Organization (EPFO). Under this scheme, the government pays the full contribution of 12% (PF and Pension) for new employees registered with EPFO. This is valid for 3 years for employees earning up to Rs 15,000 per month and registered for EPFO after 1st August 2016. 

The government increased its contribution from 8.33% in April 2016, to full 12% in April 2018. This resulted in an exponential increase in EPFO registered employees over the last 3 years. As of January 2019, over 1 crore beneficiaries had been registered under PMRPY. PMRPY scheme serves the dual benefit of incentivising employers to hire new employees for whom the government pays EPF contribution and for a large population of labourers to find work. These labourers were supposed to get social security benefits of PF, pension and death linked insurance. 

But what we can observe from the numbers is that the majority of new employees enrolled under PMRPY age below 25 years. Hence they will have to wait a long time to reach 58 years to receive their PF and pension money. But it is not their fault that the government deposited their salary, due to which they will be unable to withdraw their PF and pension when needed. 

Is It Mentioned In Any Document That Person Needs To Turn 58 Years For PF Pension Withdrawal?

No. There is no such clause in the document which states that a person needs to wait till 58 years to be eligible for PF Pension withdrawal. Hence, this looks like a big loophole in the PMRPY scheme, which the government and the EPFO are using to dupe employees. Since firstly, the employees are not actually receiving any money from the government.

Secondly, if you leave one company and join another where the employer does not enrol you under PMRPY and pays your salary himself, then also you will not get PF pension withdrawal benefit. You will have to wait until you turn 58 years old. If you were to invest that money somewhere at a low return rate of 607%, then also that money would double for you. But here, you are not receiving any advantage of this PMRPY money. The only advantage is going to the government and the employer. Part of your salary would be deducted for any reason.

What Action To Take?

If you feel this is unfair, then help us make your people aware of the situation. Share this article with the #EPFOGiveJustive to bring awareness to this problem. You can also share this tweet.

https://twitter.com/AdvisorLaborLaw/status/1141321847801184258?s=09

Watch and share our video on this topic below:

Other important PF related articles to browse through:

  • 5 rules for easy EPF calculation – blog/video
  • All about the EPF Act and amendments – blog/video
  • How to check EPF balance – blog/video
  • FAQs about EPF registration – blog/video
  • How to complete your EPF challan payment – blog/video
  • How to register employees on EPF – blog/video
  • PF confirmation slip of online payment – blog/video

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Heena Siddique
Heena Siddique
Bibliophile. Turophile. Foodie. Tea enthusiast. Shopaholic. Sitcom addict. Movie buff.

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