The Employees’ Provident Fund Organisation (EPFO) has increased the minimum time period for premature final settlement during unemployment from the current two months to 12 months. The minimum period for final pension withdrawal has also been raised from two months to 36 months.
These changes, along with relaxed withdrawal rules for education, illness, housing, and special circumstances, are expected to come into effect in the next 1–2 months, a government official said on Tuesday.
The increase in the minimum period for premature final settlement affects only 25% of the PF contribution, which is the minimum balance requirement. The remaining 75% can still be withdrawn at any time.
EPFO Increases Minimum PF Withdrawal Period
About 50% of EPF members have less than ₹20,000 at the time of final settlement, and 75% of pension withdrawals happen within four years, the official said.
“We have observed that some people, after being unemployed for just 2 months and withdrawing their entire PF amount, join another company again. This harms them because they withdraw the full amount and become ineligible for a pension,” the official said. “Due to frequent withdrawals, members cannot build a sufficient pension corpus.”
Therefore, the minimum period for PF withdrawals during unemployment has been increased from 2 months to 12 months for the 25% locked-in amount, the official added.
Changes in Withdrawal Rules
This clarification comes after the EPFO introduced major changes in withdrawal rules for over 30 crore members. Withdrawals for education are now allowed up to 10 times, and for marriage up to 5 times, compared with the earlier limit of 3 partial withdrawals combined.
EPF members can also withdraw funds under a ‘special circumstances’ category without giving any reason. The minimum service period required for withdrawals has been reduced: 12 months for housing (from 5 years), 7 years for education and marriage, and any time during service for other withdrawals.
