EPFO Rules Change: The Employees’ Provident Fund Organisation (EPFO) has introduced a significant change in its partial withdrawal rules for its members. To facilitate employees, several rules have been relaxed, bringing relief to crores of PF account holders. Recently, the Central Board of Trustees (CBT) of EPFO took these decisions in a meeting, and the Union Ministry of Labour and Employment has provided details about these new rules through a statement.
Withdrawal Rules in Case of Unemployment
EPFO has decided that if an employee wishes to withdraw their entire EPF balance due to unemployment, they will now have to wait for at least 12 months. Previously, this waiting period was just 2 months. However, a member can withdraw up to 75% of their PF balance immediately after becoming unemployed. This 75% includes the contributions of both the employee and the employer, along with the interest earned on it. The remaining 25% balance can be withdrawn after the completion of one year.
Additionally, a full 100% PF withdrawal is permitted under certain special circumstances, such as retirement after the age of 55, permanent disability, inability to work, retrenchment, voluntary retirement, or permanently leaving India.
Major Changes in Partial Withdrawal Rules
The EPFO has also significantly simplified the rules for partial withdrawals for its members. The previous 13 different provisions for partial withdrawal have been consolidated into a simplified framework. As per the new rule, members can now withdraw up to 100% of their eligible balance through partial withdrawals.
- Minimum Service Period: The minimum service period for all types of partial withdrawals has now been reduced to just 12 months. Earlier, this period varied for different cases, going up to 7 years.
- Withdrawal Amount: Previously, members could only withdraw their own contributions and the interest earned on them. But now, the employer’s contribution is also included in the eligible balance for partial withdrawal. This will significantly increase the eligible withdrawal amount compared to before.
- Simplification for Special Circumstances: Three categories have been created for essential needs like illness, education, and marriage; residential needs; and special circumstances. Members can now withdraw funds 10 times for education and 5 times for marriage, which was previously possible only 3 times for both cases. Furthermore, there will be no need to provide any justification for withdrawals under special circumstances, which was a major reason for claim rejections in the past.
Mandatory Minimum Balance of 25%
Keeping retirement security in mind, EPFO has introduced a new rule. From now on, members must always maintain a minimum balance of 25% of their own contribution in their PF account. According to the Ministry of Labour, frequent withdrawals often lead to a very low PF balance at the time of retirement. This new rule will help ensure a reasonable amount of funds for members at the time of their retirement.
