Think Twice Before Withdrawing PF for Housing

Now under relaxed provident fund (PF) norms , 90 percent of the total accumulated in corpus of one’s PF can be withdrawn to buy a home.

While the idea sounds relieving in terms of having greater liberty over your retirement savings, it might be good to adopt a cautious approach before using the avenue.

According to Financial Planners, withdrawing PF to finance life’s ambitions should be last among all money options. Says S Sridharan , Business Head, Financial Planning, Wealth Ladder Investment Advisors “Don’t do it until there is a dire need of it.”

And if it buying the house is an absolute necessary, “The subscriber should ideally ensure that repayment is not more than 50% of the overall income,” he adds.

Manoj Nagpal, CEO, Outlook Asia Capital, says old age needs were not a big concern in joint family times, but now with emergence of nuclear family model even in Tier II cities, withdrawing retirement savings can take its toll on times ahead.

Recently Emplyees’ Provident Fund Organisation (EPFO) relaxed its norms and an EPF subscriber who is a member of a co-operative or housing society with at least 10 members can withdraw up to 90 per cent from the fund for purchase of a dwelling house or flat or construction of a dwelling house and acquisition of site.

The employee should have been a member of EPFO for at least three years and accumulation in the member’s PF account (or together with the spouse), including the interest, has to be more than Rs 20,000.

The withdrawal can be made only once.

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