The EPFO has promised to simplify partial withdrawals, but it has now set stricter rules for full withdrawals before retirement. The government’s goal is clear: employees should get money for urgent needs while still saving enough for the future.
Money Running Out Before Retirement
Recent data from the central government shows a worrying trend. About 50% of EPF members have less than ₹20,000 in their accounts when they withdraw money. Nearly 75% of employees have less than ₹50,000 in their PF accounts. Around 87% of members have less than ₹1 lakh in savings even as they near retirement.
The government says this shows that most people are not saving enough for old age. Frequently withdrawing small amounts is reducing retirement funds. To solve this problem, the rules for EPF withdrawals have now been changed.
EPF Withdrawals Will Now Be Restricted
To promote savings among employees and strengthen retirement funds, the EPFO made several important decisions in a meeting chaired by Union Labor Minister Mansukh Mandaviya. The most significant change is in the rules for premature withdrawals.
Minimum Balance Requirement
Every PF account must now maintain a minimum balance of 25%. This means you cannot completely empty your account.
Longer Wait for Full Withdrawal
If you want to withdraw your entire PF balance after leaving your job, you must now wait 12 months instead of 2 months.
Pension Withdrawals More Difficult
The waiting period for pension fund withdrawals has increased from 2 months to 36 months (3 years). Officials say this is necessary because 75% of pension members withdraw all funds immediately, leaving their old age insecure.
Easy Access to Funds When Needed
While the government has tightened rules for full withdrawals, it has made partial withdrawals easier. Employees can withdraw funds for specific needs such as medical treatment, marriage, or education. Last year, the EPFO received 70 million applications for partial withdrawals, and 60 million were approved.
A senior official explained, “It’s your money, and you can withdraw it if needed. But the minimum balance will keep your account active and continue earning an 8.25% interest rate.” This ensures a balance between immediate needs and future security.
Government Launches ‘Employee Enrollment Campaign’
The EPFO is also helping employees who have not yet enrolled in the scheme. A new enrollment scheme will start on November 1. It is for employees who joined between July 2017 and October 2025 but did not open a PF account. Under this scheme, employers must deposit the employee’s outstanding contribution with interest.
If no deductions were made from the employee’s salary before, they do not need to deposit previous contributions. The EPFO has only imposed a small penalty of ₹100 on employers who did not enroll employees, to encourage more people to join. The government believes that small savings today can grow into a substantial retirement fund.