The Employees’ Provident Fund Organisation (EPFO) has approved simplifications in the fund withdrawal process for subscribers. Banasree Purkayastha explains what the changes mean for the 300 million-plus members of the retirement fund body
New partial withdrawal rules
The partial withdrawl provisions have been simplified by merging 13 complex provisions into a single, streamlined rule categorised into three types —essential needs (illness, education, marriage); housing needs; and special circumstances. Earlier, under ‘Special Circumstances,’ an EPFO member was required to clarify the reasons for partial withdrawals — natural calamity, lockouts/closure of establishments, continuous unemployment, outbreak of epidemic, etc. This often led to rejection of claims and consequent grievances.
Now, the member can apply without assigning any reasons under this category. Withdrawals for education will be allowed up to 10 times and for marriage up to five times from the current limit of three partial withdrawals for marriage and education combined.
The minimum service period required to withdraw funds has been reduced to 12 months from minimum five years for housing, minimum seven years for education and marriage and, any time during service for other withdrawals.
Longer wait for those laid off
However, the retirement fund body’s Central Board of Trustees also decided to change the period for availing premature final settlement of EPF from the existing two months to 12 months and final pension withdrawal from two months to 36 months. This means that members will be allowed to withdraw their provident fund after 12 months of losing their job and Employees’ Pension Scheme fund after 36 months, in case they want to prematurely close their EPF account.
The existing rule allowed EPFO members to withdraw 75% of their retirement kitty after one month of unemployment and 100% after two months of job loss. With mass layoffs becoming more common, this rule change will make it difficult for newly unemployed professionals to meet their financial responsibilities as they will have to wait for one full year to access their savings.
Minimum balance at 25%
EPF MEMBERS WILL be able to withdraw up to 100% of the eligible balance in the fund including employee and employer share, as per a statement by the ministry of labour and employment. However, they will be required to earmark 25% of the contributions in their account as minimum balance to be maintained by the active member at all times. This effectively means that subscribers will be able to withdraw up to a maximum of 75% of their retirement corpus.
“This will enable the member to enjoy a high rate of interest offered by EPFO (8.25% now) along with compounding benefits to accumulate a high value retirement corpus. This rationalisation enhances ease of access while ensuring members maintain a sufficient retirement corpus,” the ministry said.
Life certificates for pensioners
The board has also approved an agreement with India Post Payments Bank (IPPB) to provide doorstep Digital Life Certificate services to EPS pensioners at a cost of `50 per certificate, fully borne by EPFO. This will allow pensioners, especially in rural and remote areas, to submit their life certificates from home through IPPB’s vast postal network, free of charge.
The partnership aims to enhance ease of living for elderly pensioners, ensure timely pension continuity, enable quicker family pension initiation and improve accuracy under the Centralised Pension Payment System. It has also approved a comprehensive member-centric digital transformation framework to enable faster, automated claims, instant withdrawals, and seamless payroll-linked contributions.
Tackling belated remittances
The board has also approved a new initiative called Vishwas Scheme to address long-pending litigations arising from imposition of damages on employers for belated remittances of PF dues. All cases pending shall stand abated, in case of compliance under the ‘Vishwas Scheme.’ Members stand to benefit from faster recovery of dues, quicker reinvestment of funds and improved returns.
Under the scheme, the rate of penal damages will be reduced to a flat rate of 1% per month, except for a graded rate of 0.25% for default up to 2 months and 0.50% for default up to 4 months. The scheme shall remain in operation for six months and is extendable by another six months.
As of May, 2025, outstanding penal damages stand at `2,406 crore, with over 6,000 cases pending across forums including High Courts, CGITs and Supreme Court. Further, nearly 21,000 potential litigation cases are pending under EPFO’s e-proceedings portal. The rate of penal damages prior to 2024 was ranging from 5% to 25% per annum whereas for delayed remittances prior to 2008 period, it varied from 17% per annum to 37% per annum. This high rate of penal damages had led to the large number of litigations.