EPFO Overhauls PF Withdrawal Rules: Easier Access, 75% Balance Available

EPFO Simplifies Provident Fund Withdrawals

The Employees' Provident Fund Organisation (EPFO) has recently introduced a significantly simplified framework for provident fund (PF) withdrawals, aiming to alleviate the complexities and frustrations many members faced with older, disparate rules.

Previously, 13 different provisions governed PF withdrawals, each with its own minimum service requirement ranging from two to seven years. This often led to confusion and claim rejections. Furthermore, withdrawals were frequently limited to the employee's own contribution, capped between 50% and 100% of that portion.

New Framework Offers Greater Access

Under the revised rules, all partial withdrawal provisions have been consolidated into a single system. The minimum service period for almost all types of withdrawals has been standardized to just 12 months. Crucially, members can now withdraw up to 75% of their total eligible PF balance, which now includes both employee and employer contributions along with accrued interest. This offers substantially greater liquidity than previously allowed.

Conditions for Withdrawal

After completing 12 months of service, members can access funds for medical treatment (up to three times annually), education of self or children (up to ten times total), marriage of self or children (up to five times total), and housing needs like purchase, construction, loan repayment, or renovation (up to five times total). A 'special circumstances' category allows withdrawal up to two times annually without a specific reason.

Retaining Retirement Corpus

Despite easing access, the EPFO is committed to preserving long-term retirement security. Data indicated that frequent withdrawals depleted retirement savings, with many low-income workers having less than ₹50,000 in their PF account at final settlement. To counter this, EPFO mandates retaining 25% of the PF balance as a safety net, ensuring a corpus remains for retirement.

Handling Unemployment

During periods of unemployment, members can withdraw 75% of their PF balance immediately. The remaining 25% can be withdrawn after one year of unemployment. Full withdrawal of the entire balance, including the retained 25%, is permitted in specific cases such as retirement, permanent disability, retrenchment, voluntary retirement, or permanent emigration.

Pension Scheme Unaffected

These changes do not impact pension benefits under the Employees' Pension Scheme (EPS). While pension accumulations can be withdrawn before 10 years of service, a minimum of 10 years of EPS membership is mandatory to receive a monthly pension after retirement.