New PF Norms leave Expats in Lurch

Withdrawals by foreign workers after they turn 58, but it is not the end of the contract: EPFO.
Nearly 7,000 expatriates are caught in a battle between India and the United states over contributions made by their citizens towards provident and pension funds and social security.
The employees Provident Fund organizations which handles provident and pension funds for the organized sector employees in India, recently tightened the norms which has resulted in protests from expats and their employers. Following the amendments international workers would be permitted to withdraw their accumulated balance only after they turn 58. Though contribution to PF and Employees’ Pension Scheme (EPS) which amounts to 12% of the monthly pay, was mandated in 2008, withdrawals were permitted at the expat’s employment in India. Now, withdrawal is only permitted in case of permanent and total incapacity to work or in case of those suffering from cancer, leprosy or tuberculosis.
An exemption towards EPFO contribution has only been the main case of employees from countries with which India has signed Social Security agreements and the list includes three nations – Belgium, France, and Germany. For India, these is retaliatory action prompted by the refusal of the US to sign a Totalization Agreement that would make it possible for Indian professionals several of whom are IT company employees on onsite visits, to get their dues when they finish their employment. In the absence of a Totalization Agreement the US refused to refund the money deducted from the salaries of Indian professionals towards social security contribution.
Despite the Indian government making a case for a pact for over a decade, the US has refused to sign one saying India does not have a social security system. It has refused to accept the EPF or even the New Pensions Scheme as one. In the absence of an agreement Indians working in the US have complained for years that they are losing significant amounts.
A consultants told TOI that the EPPO amendment makes it virtually impossible for an international worker to withdraw money from his or her PF account or from the EPS. You need a bank account into which money can be transferred by EPPO and in the absence of a visa you cannot have a bank account. The executive at one of the largest global consulting companies said. A senior EPPO official said that in due course transfer to an account overseas might be permitted, But an FAQ (Frequent Asked question) on the EPFO website is silent on the proposal.
Most of the international workers are well below the retirement age of 58 years and come to work in India for a limited number of years. If they are not permitted to withdraw the PF amount until the age of 58, huge sums of money will get blocked in their PF accounts (and may well be lost) since it would be extremely challenging for them to come back and reclaim this money upon retirement, consultant from Price Water Coopers said in a recent report. It further said that the change was even more significant for those who had been contributing since 2008 as they were expecting to recover their contributions at the time of their repatriation and will have to wait for many more years to get their rightful dues.
Excerpts from The Times of India

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  • Pvnykakkar

    I think with the Americans it is always take more and give less.If they can enact whatever law they like in their country which hurts others about which they are least bothered it is about time they got a dose of their own medicine.In fact many African countries had even harsher rules to externalising money.They would put the money in a pipeline and externalise only on a quota of first come first served basis and in between they devalued their currency to gain maximum amount of ex pats money in the pipeline.Do unto others as u would have them do unto u.

  • Guypit

    Pvnykakkar – stop talking rubbish – it is the narrow minded indian department of labour screwing things up for people like myself. They have no idea what they are doing and are making life a nightmare for all foreigners because they want to shaft the Americans. Your do unto others sentiment irritates me. I am not American and they irritate me too, but take your battle elsewhere and rather try get this screwed up INdian government to sort their shit out

  • 123

    Guypit, The Indian dept of Labour understands exactly what its doing. Today most Indians get screwed over by paying for American social security. A tit for tat is most well deserved.