In a major policy shift ahead of Diwali, the Employees’ Provident Fund Organisation (EPFO) has allowed members to withdraw up to 100 per cent of their eligible balance from their provident fund (PF) accounts. The decision, approved at the 238th meeting of the Central Board of Trustees (CBT) in New Delhi, was chaired by Union Labour and Employment Minister Mansukh Mandaviya.
The reform marks one of the most significant changes in India’s retirement savings framework in recent years. Previously, full PF withdrawal was permitted only in limited cases, such as retirement or prolonged unemployment. Members could access 75 per cent of their savings after one month of joblessness and the remaining 25 per cent after two months. Under the new rule, individuals can withdraw the entire eligible balance, offering greater financial flexibility during critical life phases.
For housing-related withdrawals—such as buying property, constructing a home, or repaying EMIs—members were earlier restricted to 90 per cent of their PF balance. The revised guidelines now extend that limit to 100 per cent, enabling contributors to better utilise their savings.
To simplify the system, the EPFO has merged 13 withdrawal provisions into three categories: essential needs (such as illness, education, and marriage), housing needs, and special circumstances. Withdrawal limits have been liberalised—members can now make up to 10 withdrawals for education and five for marriage, compared to the earlier combined limit of three. The minimum service requirement for partial withdrawals has also been standardised to 12 months.
Additionally, the EPFO has launched a zero-documentation process that automates 100 per cent of partial withdrawal claims, ensuring faster settlements. However, to maintain long-term financial discipline, members must retain at least 25 per cent of their contributions in their PF accounts to continue earning the annual interest rate of 8.25 per cent.
The CBT also extended timelines for premature settlements—allowing final withdrawals after 12 months instead of two—and increased the pension withdrawal period from two months to 36 months.
With these sweeping changes, the EPFO aims to make provident fund access more flexible, transparent, and aligned with the evolving financial needs of India’s salaried workforce.
