Why you should not withdraw from your EPF in 2011

Do you treat your EPF and other retiral accounts like an ATM that you can raid for money whenever you need it? If so, this might hurt you in the long run. Lets tell you why.
Recently, it has been reported in the press that the Finance Ministry is unhappy about individuals prematurely withdrawing funds from their EPF accounts (Employee Provident Fund). It has instructed the necessary departments to look into new policy guidelines and rules for these retiral accounts.
Whatever the regulations end up as, and whatever the faults of the current design of the EPF, an EPF account is a good way of creating a regular savings nest towards ones retirement years. Its an automatic way of getting into the discipline of setting aside some funds for a time in the future when you will have no regular source of salary income.
By leaving your money in your EPF account, you are allowing it to grow and compound over time, based on the rate of return that is guaranteed to an account holder. This is the dynamic that will help your corpus grow into something large over time.
However, if you withdraw from this account to fund the purchase of a car, or to buy property or pay medical bills (all three of which were specifically pointed out by the Ministry as commonly given reasons for withdrawals), then you are depleting this account and are interfering with the process of compounding of your capital.
Compounding of capital works best if the capital is left uninterrupted to compound every year. By constantly withdrawing from your retiral accounts such as EPF and PF you are adversely obstructing the funds in these accounts from snowballing into a big amount that can fund your retirement in the twilight of your life. Its best if these funds are left untouched unless you are left with no other practical option to raise funds.
So promise yourself that in 2011 you will leave your retiral accounts to grow and will not raid into them to fund your consumption today at the expense of your consumption years from now when you don't have regular income.