EPFO New Rules On Withdrawals Explained: Myths Vs Facts, Government Clarifies On Misleading Claims

The Ministry of Labour and Employment has dismissed misleading claims circulating on social media about recent reforms under the Employees’ Provident Fund Organisation (EPFO). A PIB release stated that the posts were “factually incorrect and grossly misleading,” as they distorted facts related to EPF withdrawal rules, eligibility conditions and access to provident fund balances.

According to the Ministry, 13 complex provisions were merged into three simplified categories to make withdrawals easier and more transparent. The minimum employment period required for withdrawals was also reduced from seven years to one year. Members can now withdraw up to 75% of their eligible amount at any time without any documentation, the government clarified on Oct. 15.

A post on the EPFO handle on X clarified the withdrawal rules under the new provisions. It stated, “EPF Myth Busted! EPF members can withdraw up to 75% of balance under the new provisions. The remaining 25% EPF Balance stays safe for withdrawal at the time of final settlement.”

The post included an image breaking down myths and facts. In the “myth” section, it mentioned, “You cannot withdraw your EPF even if unemployed.” The “fact” section corrected this, stating, “Members can withdraw up to 75% of balance under simplified provisions. The balance 25% stays safe for withdrawal at the time of final settlement.”

The PIB release clarified that 75% of the balance included both the employer and employee contributions, along with accrued interest. The balance of 25% can be withdrawn after one year. Total withdrawal is allowed in certain circumstances, like retirement at the age of 55, permanent disability, inability to work, retrenchment, voluntary retirement, or permanent relocation outside India.

The government added that the pension entitlement at the age of 58 years also remains unaffected by the changes. A member is allowed to withdraw pension account accumulations prior to completing 10 years of service. But to be eligible for a pension on retirement, an individual must have been a member of the EPS for at least 10 years.

It also dismissed claims suggesting that the new rules reflect a rise in unemployment expectations, calling them baseless. The Ministry cited official data showing that over 1.29 crore workers were added to the payroll in 2024-25, and the unemployment rate declined to 3.2% in 2023-24, down from 6% in 2017-18.

A post under the subreddit r/IndiaFinance also debunked misleading claims over the EPFO reforms. The post was titled, “EPFO 3.0 Rules Unveiled: What You Can Withdraw After Job Loss – Myths Busted & Timelines Explained.”

One of the myths, highlighted in the post, was that “25% of the employee’s money has been locked and withdrawals have been restricted.” The “fact,” the post clarified, is that “Earlier, there were 13 different categories with numerous conditions under which money used to get locked. These have now been simplified into one uniform provision, making it much easier to withdraw money without any documentation.”

According to the Reddit post, the simplified withdrawal system reduces bureaucracy and allows quicker access to funds. For those who lose their jobs, the changes provide more “breathing room,” said the post, adding, “You don’t lose access completely, you can still take 75%.” The post also added that the 12-month waiting period for full withdrawal encourages better financial planning during this interim.