The EPFO has made a major change to the withdrawal rules for its unemployed members. While the full amount from the EPF fund can now be withdrawn after 12 months of unemployment, to withdraw the full amount from the Pension Fund (EPS), one will now have to wait 36 months, or three years. This decision was taken at a meeting of the Central Board of Trustees (CBT) chaired by Labor Minister Mansukh Mandaviya, and will directly impact millions of employees.
Why the 3-year wait for pension fund withdrawals
The EPFO has allowed withdrawals of up to 100% of the EPF fund, beyond the minimum required balance, but has imposed a three-year waiting period on the pension fund. Justifying this decision, Union Labor Minister Mansukh Mandaviya stated that the EPF fund is the members’ own money, and therefore, withdrawals of the remaining amount, beyond the minimum balance, are permitted at any time. However, social security is equally important.
The Board observed that many members find a second or third job within a few months, but by then, they have already withdrawn their pension funds. Consequently, even after several years, they fail to complete the minimum 10 years of service required for a pension, and are deprived of pension benefits. Therefore, it has been decided to allow withdrawal of pension funds after 36 months from the date of retirement, instead of two months.
Importance of a 25% Minimum Balance in EPF Account
The Ministry of Labor believes that having a respectable amount upon retirement after a long service is extremely important for members’ future lives. This is why a 25% minimum balance in the EPF account has been mandated. Labor Ministry data shows that most EPF members have very low savings.
According to current data, 50% of EPF members have less than ₹20,000 in their accounts at the time of final settlement. 75 percent of members have less than ₹50,000, while 87 percent have less than ₹100,000. This decision is a strong step towards ensuring future security for members.
Withdrawal Trends
The financial dependence of EPF members can be gauged from the fact that 70 million withdrawal applications were received during 2024-25. Of these, 10 million were rejected, while 60 million were approved. Of the approved applications, 32.4 million were based on illness. The average pension fund withdrawal also shows that 75 percent of withdrawals occur within four years, which is why the 36-month limit has been explicitly imposed.
EPFO has a huge corpus of ₹28 lakh crore
EPFO currently holds a huge corpus of approximately ₹28 lakh crore from its members. This amount includes ₹18 lakh crore in the Provident Fund, ₹1 lakh crore in the Pension Fund, and ₹70,000 crore in the Insurance Fund. EPFO strives to manage deposits efficiently so that members continue to receive better returns and social security benefits.