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About 10.4 million salaried workers had to withdraw their retirement savings during the coronavirus induced nationwide lockdown.

The Employees Provident Fund (EPF) members withdrew a whopping Rs. 39,402 crore from their PF accounts in between March 25 and August 31 according to the data from the government.

A total of 10.4 million salaried workers have dipped into their retirement savings from March to August amid the COVID-19 crisis and in these people, about 8.1 million are those who earn less than Rs. 15,000 per month.

This situation reflects the hardships being faced by people during the COVID-19 lockdown due to job losses and salary cuts.

The labor ministry gave the detailed state wise list of withdrawals and said that the maximum amount of EPF withdrawals were recorded in Maharashtra followed by Karnataka with the amounts of Rs. 7837.5 crores and  Rs. 5743.96 crores respectively.

The next in line comes Tamil Nadu along with Puducherry with the total EPF withdrawal amount being Rs. 4984.91 crores.

The total EPF withdrawals in Delhi during the same period stood at Rs. 2947 crores.

This total withdrawal amount of Rs. 39,000 crores is about 30 percent of the EPFO’s annual accruals and this may have a longterm impact on the financial health of the Employee Provident Fund Organization.

Though the labor ministry has not mentioned the exact reason for the withdrawals but the data from the EPFO shows that at least a majority of the withdrawals are related to the COVID-19 advances.

In the EPFO statement which has been issued earlier this month, it has been mentioned that 55 percent of the provident fund claims settled during the period of March to August were related to the recently introduced COVID-19 advances and about 31 percent of the withdrawals were related to the illness claims.

The labor minister had informed Lok Sabha that the hardships being faced by the people due to the aggravating COVID-19 situation needs to be alleviated and for this various initiatives have been introduced by the Ministry of Labor and Employment as a part of the Pradhan Mantri Garib Kalyan Yojana Scheme and also the Atma Nirbhar Bharat scheme.

These initiatives include payment of 12 percent of employers’ share and 12 of the employees’ share under the Employees Provident Fund which totals to 24 percent by the government for six salaried months from March to August for all the companies and organizations having up to 100 employees with 90 percent of such employees earning less than Rs. 15,000 per month.

Meanwhile, the government has also reduced the EPF contribution from 12 percent to 10 percent for the wages for the months of May to July 2020.

By Gayatri Yellayi