EPFO eases money withdrawal rules; 6 major changes everyone should know

The Employees' Provident Fund Organisation (EPFO) has now allowed its members to withdraw up to 100 per cent of their eligible PF balance under specific conditions. This was announced on Monday, October 13. The decision was taken at the 238th meeting of the Central Board of Trustees (CBT) held in New Delhi.

The board approved a proposal to merge 13 complex and overlapping provisions into a single, streamlined framework divided into three categories - Essential Needs, Housing Needs and Special Circumstances. According to the Ministry of Labour & Employment, the changes are designed to improve the Ease of Living for EPF members and ensure quicker access to funds during important life events.

What were the rules earlier?

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Earlier, the members could withdraw the full PF amount in case of unemployment or retirement. They could take out 75 per cent of the balance after one month of job loss and the remaining 25 per cent after two months. However, full withdrawal at retirement had no restrictions.

If members wanted to make a partial (up to 90 per cent) withdrawal, they could do so for buying land, repaying a home loan, or building a home.

As the government has now eased the PF withdrawal rules, here are six things that you should know:

Simpler partial withdrawal rules

The government approved a proposal to merge 13 complex and overlapping provisions into a single, streamlined framework divided into three categories - Essential Needs, Housing Needs, and Special Circumstances.

As per the new rules, members can now withdraw for education up to 10 times and for marriage up to 5 times. Earlier, the members could only withdraw three times for both purposes.

Also, there is no minimum service requirement for partial withdrawal.

No reason required for special cases

In case of unemployment, natural disasters, factory closures, epidemics, and others, there is no need to give a reason for PF withdrawal.

To maintain a minimum balance

25 per cent of the member’s contributions must remain in the account at all times. This amount will continue to earn interest, which is currently 8.25 per cent per year.

This rule is made to have a basic retirement corpus.

No paperwork

For claims, there is no paperwork required now. This will help members reduce delays and improve convenience.

Vishwas Scheme launch

The government has also approved the launch of the Vishwas Scheme to reduce litigation, the rollout of Doorstep Digital Life Certificate services, and the modernisation of EPFO systems through EPFO 3.0.

Pension withdrawal

Now, the waiting period to apply for premature and final pension settlement has been increased from two months to 12 months and 36 months, respectively.