The Employees’ Provident Fund Organisation (EPFO) has taken a major step towards making the use of Provident Fund (PF) easier. From now on, members will be able to withdraw up to 100% of their eligible PF balance. This will include both employee and employer contributions. This important decision was taken at the 238th meeting of the Central Board of Trustees (CBT) held in New Delhi. There is great good news coming in terms of withdrawal from EPFO.

Full PF access now easier

Till now, full PF withdrawal was allowed only in case of unemployment or retirement. In case of job loss, a member could withdraw 75% of the balance after one month and the remaining 25% after two months. There was no bar on full withdrawal in case of retirement. For partial withdrawal, members could withdraw up to 90% of the account for purposes like buying land, building a house or repaying a home loan. As a result of this new decision, EPFO ​​members will now be able to use their entire eligible balance whenever required, subject to certain updated rules.

Partial withdrawal rules are simple

To make the process easier, the board has done away with 13 complex conditions and brought them under a clear framework, with three main categories:

1. Essential Needs: These include illness, education and marriage.

2. Housing Needs

3. Special Circumstances

The withdrawal limits have also been relaxed:

Up to 10 withdrawals can now be made for education and up to 5 for marriage. Earlier, only three withdrawals were allowed for these two purposes combined. The minimum period of service for all types of partial withdrawals has been reduced to 12 months. A major relief has come in the ‘Special Circumstances’ category. Earlier, members had to give specific reasons like natural calamity, unemployment, factory closure or pandemic. Many claims were rejected due to unclear documentation. Now, withdrawals can be made under this category without giving any reason.

Minimum balance must be maintained

To protect retirement savings, EPFO ​​has introduced a new rule: 25% of a member’s contribution must be kept in the account at all times. Interest will be paid on this amount, which is currently 8.25% per annum. The idea is to provide members with access to the money while maintaining a basic retirement fund.

Zero paperwork and quick settlement

The board also announced that partial withdrawal claims will now be settled automatically without any paperwork. This move towards digital processing is expected to reduce delays and increase benefits for members.

Pension withdrawal period extended

Also, the waiting period for applying for premature final settlement has been increased from two months to 12 months. And the time limit for withdrawing final pension has been increased from two months to 36 months. These changes will strike a balance between immediate needs and long-term financial security.

Other important initiatives

  • Apart from the reform of withdrawal rules, some other important decisions were approved in this meeting:
  • Launch of Vishwas Scheme, which aims to reduce litigation.
  • Launch of Doorstep Digital Life Certificate service.
  • Modernisation of EPFO ​​systems through EPFO ​​3.0.

Taken together, these decisions will make it easier for members to access money, reduce hassle and provide greater flexibility without putting their retirement savings at risk.

The new rules have brought in specific obligations for subscribers. Officials said that from now on, every subscriber will have to maintain at least 25% balance in their account. This means that even after leaving the job, some money will remain in the account, so that the interest benefit continues. According to EPFO ​​data, about 50% of members still have funds of less than Rs 20,000 in their accounts at the time of settlement. This change is considered important in ensuring financial benefits for them.

EPFO statistics show that 50% of subscribers have less than Rs 20,000 in their accounts at the time of final settlement and 87% of members have less than Rs 1 lakh in savings. The government wants people to consider it as a long-term social security fund rather than withdrawing money suddenly.

Withdraw money after 12 months

Earlier, if one was not employed in an organization for a long time or did not get salary for more than 2 months, then 100% withdrawal of the entire PF was allowed. According to the new rules, in such cases, only 75% withdrawal will be possible for the first 12 months. The entire fund will be available only after the unemployment period completes 12 months.