No, you cannot withdraw your pension contribution from the Employee Provident Fund (EPF) while you are actively employed. The pension portion of your EPF contributions falls under the Employee’s Pension Scheme (EPS), which is meant to provide you with a monthly pension after retirement. However, there are a few exceptional circumstances where you might be able to withdraw your EPF contribution.
Exceptions of Withdrawing EPF
1. Unemployment for More Than 2 Months: If you become unemployed for more than two months and have completed less than 10 years of service, you can withdraw your EPS contribution.
2. Permanent Migration Abroad: If you are permanently migrating to another country and have completed less than 10 years of service, you can withdraw your EPS contribution upon providing an emigration certificate.
3. Reaching Retirement Age with Less Than 10 Years of Service: If you reach the retirement age of 58 but have not completed 10 years of service, you are not eligible for a monthly pension. In this case, you can withdraw your entire EPS contribution in a lump sum.
Impact of Withdrawing Pension Contribution From PF While Working
- Withdrawing your pension contribution directly reduces the amount available for your future pension, potentially leading to financial hardship later in life.
- The EPF offers guaranteed returns and tax benefits, both of which are forfeited upon early withdrawal. This can significantly impact your retirement planning.
- Depending on your employment period and reason for withdrawal, the withdrawn amount might be partially or fully taxable, further diminishing your financial gain.
- Unlike other PF components, your pension contribution is only accessible under specific situations like unemployment or permanent emigration, limiting its flexibility.
- Early withdrawal might lead to regret later in life when you realize the impact it has on your retirement security, especially if alternative solutions were available.
Alternatives of Withdrawing EPF
- Advance Withdrawal for Medical Treatment: Under certain medical conditions, you can withdraw a portion of your EPF corpus for medical treatment.
- Loan against EPF: You can apply for a loan against your EPF for various purposes.
The decision to withdraw your pension contribution from EPF is a significant one with long-term consequences. Carefully consider your financial situation, goals, and alternative options before making a decision. It’s also recommended to seek professional financial advice if needed.