PF withdrawals rise in shaky job market

The fallout from the economic slowdown is now being felt in the corridors of provident fund (PF) offices. As businesses cut back on spending and reduce manpower, an increasing number of the unemployed is falling back on PF to tide over their misfortune. 

This had led to the regional PF office in Mumbai receiving 15,000-20,000 withdrawal applications in excess of the normal count over the past couple of months. 

“Over the past two to three months, we have seen a 7.5-10% increase in PF withdrawal applications,” said Ramesh Soni, a labour law consultant based in Mumbai. Even employees who switch jobs are considering PF money withdrawal rather than transferring the funds into the PF account of their new employers. 

The increase in withdrawal applications has lead to increased fund requirements by the PF office.

This has raised concerns among PF consultants about fund sufficiency at the PF office. However, brushing off such concerns, PM Mathew, regional provident fund commissioner, (Mumbai – I region) said, “We receive funds every month from the companies (fulfilling their PF obligations) which are more than sufficient to service any withdrawal requests.” 

In FY08, the Mumbai office received Rs 2,615 crore from companies and disbursed Rs 1,266 crore in payments towards PF withdrawal. As a result of the increased workload at the PF office, the processing of applications has suffered. 

Mr Mathew acknowledged that the additional workload has stretched the PF office staff, who have increased the scrutiny of applications. According to consultants working in the field, the number of rejected applications has, therefore, increased. 

“The PF office now scrutinises applications in a more detailed manner. A small discrepancy in filling the form, which was ignored earlier, is now treated as the ground of rejection of the application,” said G Krishnamurthy, general manager (legal) Talent Maximus, a company that provides staffing solutions. 

Amit Kadam (name changed), who filed an application for withdrawal of PF after quitting his job four months ago, is still awaiting his PF disbursal despite repeated follow-ups. “Of late, the consultant, as well as, the HR person have stopped answering my calls,” said a disgruntled Mr Kadam. People, who have applied for PF withdrawal after turning jobless, might be in for aslight delay before they get their PF dues.

Source:Economictimes