EPFO's big move: No more Free-for-All PF withdrawals, new rules apply

New Delhi (The Uttam Hindu): The Employees' Provident Fund Organization (EPFO) has taken a major step toward employees' retirement planning. While partial withdrawals for immediate needs have been simplified, the rules for withdrawing the entire PF balance upon leaving the job have been tightened. The government's clear objective is to ensure employees meet their immediate needs while also ensuring their future is financially secure.

Why was there a need for a change in the rules?

Recent data released by the central government paints a worrying picture. According to these data, approximately 50% of EPF members have less than ₹20,000 in their accounts at the time of withdrawal. Nearly 75% of employees have less than ₹50,000 in their PF accounts, and 87% of members have less than ₹1 lakh even as they approach retirement. The government believes that the habit of frequently withdrawing money for small needs is depleting people's retirement funds, making their old age insecure.

These are the new conditions for withdrawals

Aiming to promote savings among employees and secure their future, several important decisions were taken at the EPFO ​​meeting chaired by Union Labor Minister Mansukh Mandaviya. Under these new rules, maintaining a minimum balance of 25% in each PF account is now mandatory, meaning employees will not be able to completely deplete their account. Additionally, the waiting period for withdrawing the entire PF amount in case of job resignation has been increased from two months to 12 months (one year). Further tightening the rules on pension fund withdrawals, the waiting period has been increased to 36 months (three years), as most pensioners used to withdraw their entire amount immediately, leaving them insecure in their old age.

Money will be easily available when needed

While on one hand there has been a stricter restriction on full withdrawal, on the other hand, the process of partial withdrawal for special needs like treatment, marriage or children's education has been simplified. Last year, out of 7 crore applications received by EPFO ​​for partial withdrawal, 6 crore were approved. A senior official said, "It is your money and you can withdraw it when needed. But the minimum balance condition will ensure that your account remains active and you continue to earn an attractive interest of 8.25%."

The government has launched the 'Employee Enrolment Campaign'

The EPFO ​​has also given a big opportunity to those employees who were not able to become a part of this social security scheme till now. A new enrolment scheme is being launched from November 1. This scheme is for all those employees who joined the job between July 2017 and October 2025, but their PF account could not be opened. Under this campaign, a nominal penalty of only Rs 100 has been imposed on the employers to enroll as many people as possible.