Provident Fund (PF) is a vital fulcrum of savings and investments for the future, especially retirement. Contributions are made both by the employer and employee for this purpose. If you have been seeking a loan against PF, it is definitely possible to obtain the same. You can withdraw funds from your own PF account as a loan for various purposes.
Partial withdrawals are allowed if the loan is for repairing or buying a house. Contributions that are made towards the EPF scheme will help salaried employees withdraw a lump sum amount when they retire.
Yet, employees are allowed to partially withdraw money throughout the course of their employment duration.
This money may be used as a loan if there are any financial emergencies to take care of. Yet, an extensive verification procedure is conducted by the EPFO for ensuring the validity of the application in question.
Post successful verification, employees may take any partial or advance withdrawal against their EPFO accounts. The important thing to note here is the employee will have to be employed in service for at least 5 years to have eligibility for the loan against pf balance.
A few reasons why employees may avail of a loan against employee provident fund include the following:
If employees want to get any loans or advances, their KYC (know your customer) details should be properly linked to their UANs or Universal Account Numbers.
Getting a loan against provident fund is not difficult although you should keep a few procedures in mind. Withdrawals represent advances instead of loans. Advances may be taken throughout your employment duration based on specific conditions. Along with the reason behind obtaining the advance, the number of years of service for the employee will also count immensely.
The key rules and regulations for EPF advances that should be followed include the following:
There are several regulations so that people do not frequently withdraw money. The key goal behind this is to ensure that people end up saving some money for their retirement at least.
Here are some of the conditions to be kept in mind.
The EPF calculator assists to calculate the sum of money your PF account accumulates on retirement. The interest rate and balance of EPF loans could be calculated with the EPF Loan calculator.
The interest on the principal is calculated according to the contribution made by the employee and the employer. You also would have to enter other information like current age, retirement age, and more.
The members that have applied for an advance loan on the PF account can check the status with a simple process. However, the member needs to have the PF account number to check the status. The status of your loan can be checked on the EPFO portal. EPF members that avail of advances would not have to pay back the money. Additionally, EPFO members need only EPF money as the last resort as it can be saved for retirement.
1) What are the reasons for obtaining a loan against PF?
Ans. The reasons may include the following:
2) What is the service period to be completed for buying or building a house and getting loan against PF for the same?
Ans. The member should have completed a minimum of 5 years in service to be eligible for a loan in this category.
3) How many times can one avail PF loan?
Ans. Money from your EPF account can be withdrawn for reasons like marriage if you have already completed five years of your service life. 50% of the fund in your EPF account can be used and one can apply for a loan against PF a maximum of three times.
4) What happens to my PF if the company is Shut Down?
In case of lock-out of the company, i.e. the company remains closed for 15 days or more and the employee has not got the salary for a couple of months or more, an amount equaling the unpaid salary may be withdrawn.
The share of the employee can be withdrawn. If the company remains closed for a longer period, the PF may also be withdrawn. If any individual remains unemployed for a month, then he/she may withdraw up to 75% of the EPF amount available. If any individual remains unemployed for 2 months or more, the full EPF amount may be withdrawn.
Up to 90% of the available balance in EPF may be withdrawn by members one year prior to actual retirement or post attaining the age of 54 years, whichever is later.
5) How long will a PF claim take to be claimed?
In the EPF scheme, the settlement of a claim would usually take 20 days.