“Now, you can withdraw 90% of PF savings for buying flat, land” – This title in a leading newspaper got a lot of us thinking. Provident Fund Money was and is nearly holy for much of India. For long it had been the only pension corpus, people had and counted it as such.

Recently, the central government informed new rules declaring that EPF members may use up to 90% of your EPF savings (see notes below) to either pay a lump sum or towards EMI payments for a property buy.

So is it good news?

It’s simple too, technically, use nearly all of that which you have accumulated in your EPF account (see note below) to purchase your home. Is it a smart move to make?

It is believed that EPF is an essential part of one’s retirement savings. EPF corpus is designed to provide a consistent income stream for you in retirement. The lock-ins constructed into EPF ensure that you see the money as a last resort or even unavailable to fund your short-term goals.

Now, this new governing allows you take money from your future to finance a purchase in today’s.

Your home, if you live with it, just isn’t an “investment” that can sustain you and your dependents. Although it cannot be against purchasing a house to reside in, this will never be done during the price of your retirement financial savings. It is advised enduring your investments even when paying a property loan EMI.

Inside the best view, for that reason, using EPF savings to fund your property buy is certainly not an intelligent decision. You should dedicate EPF to deliver you a cash flow in retirement.

Note 1: There was a catch. You will need to find at the very least nine other EPF account holders who fit in with a cooperative society, that is registered under the law, by which you want to choose the home. The EPF money to the lump-sum or EMI will soon be directly paid to the society and never to you.

Note 2: Earlier this amount was restricted to 36 months of one’s salary (basic plus dearness) for buying a flat and two years for buying land, provided you had completed five years of service.