Hardships faced by the salaried: 35 million workers tapped provident fund accounts since April 2020 – The Economic Times

Clipped from: https://economictimes.indiatimes.com/news/economy/finance/hardships-faced-by-the-salaried-35-million-workers-tapped-provident-fund-accounts-since-april-2020/articleshow/82725390.cms

SynopsisNearly 7.2 million of these workers together availed of the non-refundable Covid advance that was allowed last year amounting to Rs 18,500 crore between April 1, 2020, and May 12, 2021, data from the Employees’ Provident Fund Organisation (EPFO) showed. EPFO subscribers number about 60 million.

More than 35 million formal sector workers, over half of all provident fund subscribers, have withdrawn money from their retirement savings since April 1, 2020, reflecting the hardships faced by salaried people since the outbreak of the pandemic.

Nearly 7.2 million of these workers together availed of the non-refundable Covid advance that was allowed last year amounting to Rs 18,500 crore between April 1, 2020, and May 12, 2021, data from the Employees’ Provident Fund Organisation (EPFO) showed. EPFO subscribers number about 60 million.

These 35 million workers together withdrew Rs 1.25 lakh crore from their provident fund accounts. The amount includes settlements against provident fund, pension, death insurance and even transfers. The total claims settled by EPFO in FY19 stood at Rs 81,200 crore to 16.37 million subscribers. The data for FY20 is not available.

Indicates Job Losses
While year-on-year withdrawals or claims are at least 10% higher because of retirement exits and the switching of jobs, the number is much higher this year because of additional Covid withdrawals, officials told ET. This also indicates workers may have lost jobs because of the pandemic and were forced to withdraw provident fund money to meet expenses.

The maximum claims were from Mumbai, Pune, Delhi and Bengaluru. Apart from being industrial and services hubs, these cities also had the highest number of Covid cases.

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The EPFO is paying these claims by auto settlement within 72 hours of applications being submitted to ease the financial burden on subscribers.

The government had last year allowed EPFO subscribers to withdraw the equivalent of 75% of their accumulated funds or three months of basic pay — whichever was lower — as a one-time non-refundable advance to meet financial requirements during the pandemic.

“Average per capita withdrawals due to Covid hover around Rs 25,000, which means average monthly wage earnings (basic pay + dearness allowance) would be around Rs 8,000-9,000. In other words, it is the unskilled low-paid-wage workers who have taken advantage of withdrawals,” said KR Shyam Sundar, professor at XLRI. “At the same time, to that extent their EPF accruals will stand less, and that is something worrying when we think about medium to long-term social security of the workers.”

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