EPFO allows up to 100% EPF withdrawal, simplifies rules for members

New Delhi: In a major reform aimed at enhancing ease of access for its subscribers, which crosses seven crore, the Employees’ Provident Fund Organisation (EPFO) has approved liberalised rules for partial withdrawals, allowing members to withdraw up to 100 per cent of their eligible balance under specified categories.

The decision was taken by the Central Board of Trustees (CBT) — the apex decision-making body of EPFO — chaired by Union Labour Minister Mansukh Mandaviya, during its meeting on Monday.

According to a Labour Ministry statement, the Board has simplified the complex provisions governing partial withdrawals by merging 13 rules into three broad categories — essential needs (such as illness, education, and marriage), housing needs, and exceptional circumstances.

Under the new framework, members can withdraw up to 100 per cent of their eligible provident fund balance, including both employee and employer contributions. Withdrawal limits have been substantially liberalised — education-related withdrawals are now allowed up to 10 times, and marriage up to 5 times, compared to the earlier combined limit of three withdrawals.

The minimum service requirement for availing partial withdrawals has also been reduced uniformly to 12 months across all categories. For “special circumstances”, members will no longer be required to specify reasons such as natural calamities, lockouts, or unemployment — a move aimed at reducing rejections and grievances.

To ensure members maintain a sufficient retirement corpus, EPFO has introduced a provision to earmark 25 per cent of contributions as a minimum balance that must be retained in the account at all times. This will help members continue earning the high interest rate offered by EPFO, currently 8.25 per cent, with compounding benefits.

The new system is designed to enable 100 per cent automated processing of partial withdrawal claims, eliminating documentation requirements and significantly improving ease of living for members.

In another decision, the CBT approved changes to the waiting period for final settlements — the period for premature EPF withdrawals has been extended from 2 months to 12 months, while the period for final pension withdrawal has been revised from 2 months to 36 months.

The Board also approved the launch of the ‘Vishwas Scheme’, aimed at reducing litigation related to the delayed remittance of provident fund dues. The scheme will rationalise penal damages, with rates reduced to a flat 1 per cent per month, and a graded rate of 0.25 per cent for defaults up to 2 months and 0.50 per cent for up to 4 months.

The scheme, intended to remain operational for six months (with an option to extend by another six), will cover ongoing and pending litigation under Section 14B, including cases before High Courts, CGITs, and the Supreme Court. All pending cases will be abated upon compliance under the scheme.

To improve pensioner services, EPFO will sign an MoU with India Post Payments Bank (IPPB) to provide doorstep Digital Life Certificate (DLC) services for EPS-95 pensioners. The service, offered free of cost to pensioners, will help those in rural and remote areas submit life certificates conveniently through the postal network.

The Board also approved a comprehensive digital transformation plan under EPFO 3.0, integrating a core banking solution with cloud-native, API-first systems for faster claims, multilingual self-service, and seamless payroll-linked contributions.

Additionally, four fund managers have been selected to manage EPFO’s debt portfolio for the next five years — SBI Funds Management Limited, HDFC AMC Limited, Aditya Birla Sun Life AMC Limited, and UTI AMC Limited. The move aims to ensure prudent investment management and optimise returns on members’ savings.

During the meeting, Minister Mandaviya also inaugurated several new digital initiatives of EPFO to improve efficiency, transparency, and user experience in service delivery.