New EPFO Rules: 75% PF Withdrawal Allowed After Job Loss

The Employees’ Provident Fund Organisation (EPFO) has introduced significant changes to its withdrawal policies, allowing members to withdraw 75% of their Provident Fund (PF) balance immediately upon job loss. The remaining 25% can be accessed after a year of unemployment. This decision aims to enhance financial security for members while promoting long-term savings and pension eligibility.

Previously, members could withdraw their entire PF amount just two months after leaving a job. Now, the waiting period for full withdrawal has been extended to 12 months. Additionally, the time frame for accessing pension fund accumulation has been increased from two months to 36 months after job loss. These changes are designed to discourage premature withdrawals, which often left workers with insufficient retirement funds and no pension eligibility.

The EPFO clarified that once a person becomes a member, their EPF account remains active even after leaving a job. Contributions may stop, but the account does not close until all funds are withdrawn. Interest will continue to accrue on the account for three years if no contributions are made. After this period, the account is deemed “inoperative,” and interest ceases, although the principal amount remains safe.

If a member starts a new job and opens a new EPF account, they can transfer their old PF balance through their Universal Account Number (UAN). This transfer keeps their membership active and allows interest to continue accruing.

The EPFO has also streamlined the withdrawal categories from 13 to three: essential needs (like illness and education), housing needs, and special circumstances. Members can now make up to 10 partial withdrawals for education and five for marriage. Furthermore, the EPFO has made it easier for members to access funds in emergencies, allowing full eligible amounts to be withdrawn twice a year without documentation.

These updates reflect the EPFO's commitment to balancing financial flexibility during life events while ensuring the preservation of workers' retirement savings. The new rules are expected to take effect in the coming months, aiming to provide clarity and support to EPF members during transitions in their employment status.