EPFO Rules Tightened: Out Of Job? Now Wait 12 Months For Full Provident Fund Withdrawal

The Union government has tightened the rules by extending the time period for receiving premature final settlement to 12 months from two. It also extended the time needed for premature pension withdrawal from two months to 36 months.

This decision, among many others, was taken at the 238th meeting of the Central Board of Trustees EPF in New Delhi on Tuesday. It was chaired by Minister for Labour and Employment Mansukh Mandaviya, according to a press release.

The central government also announced a new requirement of keeping 25% of the contributions in the members' account as minimum balance to be maintained by the member at all times. This does not apply to those seeking to make a premature withdrawal after losing their job.

"This will enable the member to enjoy a high rate of interest offered by EPFO (presently 8.25% per annum) along with compounding benefits to accumulate a high value retirement corpus. This rationalization enhances ease of access while ensuring members maintain a sufficient retirement corpus," the release said.

The CBT merged 13 provisions into one rule classified into three types namely, essential needs (illness, education, marriage), housing needs and special circumstances in an effort to simplify them.

Members will also be able to withdraw up to 100% of the eligible balance in the provident fund, including employee and employer share.

It liberalised withdrawal limits with education withdrawals allowed up to 10 times and marriage up to five times (from existing limit of total of three partial withdrawals for marriage and education in all).

The requirement of minimum service has been uniformly reduced to only 12 months for all partial withdrawals.

Earlier, under 'Special Circumstances', the member was required to clarify the reasons for partial withdrawals such as natural calamity, lockouts/closure of establishments, continuous unemployment, outbreak of epidemic. This often led to rejection of claims and consequent grievances. Now, the member can apply without assigning any reasons under this category.

"Scheme provision simplification along with greater flexibility and zero need for any documentation will pave the way for 100% auto settlement of claims for partial withdrawal and ensure ease of living," it added.

The release said that the liberalization of partial withdrawals makes sure that members can meet their immediate financial needs without compromising their retirement savings or pension entitlements.