EPF NPS New Rules 2025: Retirement planning withdrawal changes, know here..
Retirement planning often seems like a daunting task for ordinary people, but the year 2025 has proven to be a game-changer for the Indian salaried class in this regard. Taking employees' long-standing grievances seriously, policymakers have implemented fundamental reforms in the Employee Provident Fund (EPF) and National Pension System (NPS) frameworks. Until now, people had to grapple with paperwork and stringent rules to access their own money, but the new reforms have made the system transparent, digital, and more flexible.
NPS Rules Have Changed
The Pension Fund Regulatory and Development Authority (PFRDA) has made NPS more attractive even for those who previously shied away from it due to the fear of long lock-in periods. The biggest relief is that the mandatory annuity (pension plan) purchase limit has been reduced from 40% to 20%. This means that at the time of retirement, you can now withdraw 80% of your total corpus as a lump sum.
The rules have become even simpler for small investors. If your NPS fund is ₹8 lakh or less, you can withdraw the entire 100% without purchasing any annuity. Also, the compulsion to wait until age 60 has been removed. You can exit the system after 15 years, and those who wish to continue investing after retirement can remain in the system until the age of 85. The facility for partial withdrawals has also been enhanced; you can now make four withdrawals before the age of 60.
100% Equity Option for Young Investors
Non-government subscribers will now be able to invest 100% of their NPS fund in equity (stock market), which was previously limited to 75%. This is a golden opportunity for young people who want to take a little risk to beat inflation. However, 100% equity means your fund will be directly affected by market fluctuations. Therefore, experts advise using a ‘Multiple Scheme Framework’ (MSF) instead of putting all your capital at risk. This allows you to diversify your money across different schemes, balancing safe and aggressive investments.
PF Withdrawal Rules Made Easier
For years, the complex procedures of the Employees' Provident Fund Organisation (EPFO) were a headache for employees, but ‘EPFO 3.0’ has completely transformed this experience. Previously, withdrawing money from PF required specifying one of 13 different reasons, such as marriage, education, buying a house, or illness, and each reason had different rules. Now, all of these have been consolidated into just three categories: essential needs, housing, and special circumstances.
The biggest relief is that you no longer need to provide any documentary evidence or lengthy explanations to withdraw money under ‘special circumstances’. If you are facing a financial crisis, you can withdraw up to 100% of your ‘eligible balance’, provided you maintain a minimum of 25% in your account. Additionally, the minimum service period for withdrawals has been standardized to 12 months.
Freedom When Leaving or Changing Jobs
You no longer need to plead with your previous company or boss for PF transfer or withdrawal when changing jobs. If your UAN is linked to Aadhaar and your KYC is complete, you can process your claim without any employer intervention. The transfer certificate (Annexure K) can now be downloaded directly from the portal.
EPFO has also prioritized security and convenience. Claims up to ₹5 lakh will now be settled digitally through a fully automated process. With the introduction of face authentication on the UMANG app, managing your PF from home has become even more secure.
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