What use is the money if the account holders can’t fully use it for their own requirements in their lifetimes? Whether they pass their own money to their legal heirs or not should be up to them and not for any other institution, including the government, to decide.
While the intent of the government may be good, making it binding defeats the purpose. Converting the employee provident fund into a pension fund should be one of the options and not the only option. Also, at no point of time withdrawals should be taxed. After all, the EPF account holders do pay their income taxes as applicable by the tax slabs.
In fact, if the government really wants to discourage spending, it could simply go back to the old normal, wherein EPF accounts used to continue earning interests for account holders as long as they wished not to withdraw. That alone would discourage people from withdrawing money from employee provident fund accounts. The EPF accounts could also be made to double up as pension accounts, based on an individual’s preference, thereby making it easier for account holders to transition to a pension scheme at a point in life when they feel ready to do so.
In a positive development, the government is reportedly open to considering a full rollback of the new EPF proposals while another report suggests the rollback could be partial.
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About the Author
Deepak carries around 25 years of experience. He is the Founder Analyst at B&M NXT. His focus areas include strategic business consulting & advisory, strategic communications, sales enablement and capacity building. He is also a columnist at Governance Now, India’s leading magazine on public policy and governance matters.
You can connect with him on LinkedIn here.
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