EPFO makes a major change, full PF balance will be withdrawn after 12 months, after job loss.

EPFO New Rule: According to the new rule, EPFO ​​subscribers can now apply for final settlement only after 12 months of leaving their job, compared to the previous two-month deadline.

EPFO New Rule: The Employees' Provident Fund Organization (EPFO) has changed the deadline for premature final settlement of provident fund and pension accounts. The rules have become stricter than before. Under this, EPFO ​​subscribers can now apply for final settlement only after 12 months of leaving their job, compared to the previous two-month deadline. Similarly, pension withdrawal will now be allowed after 36 months of unemployment.

What are the current rules?

Currently, if a member has been unemployed for at least one month, they can withdraw up to 75% of their EPF balance from their EPF account. Under Section 69(2) of the EPF scheme, a member who remains unemployed for two consecutive months is allowed to withdraw their entire EPF balance.

Regarding EPF withdrawals, Union Minister Mansukh Mandaviya stated that in the event of job loss, up to 75% of the Provident Fund balance can be withdrawn immediately. The remaining 25%, the minimum balance, can be withdrawn after one year of the job loss. He explained that the decision to simplify and liberalize partial withdrawals was taken to ensure the convenience of members and their security after retirement.

Why is it necessary to maintain a minimum balance?

Except in special circumstances, a minimum balance of at least 25% must be maintained in the EPF account so that members can continue to benefit from the high interest rate and compounding rate, which is 8.25% annually.

Another Benefit

One advantage of this change is that previously, members had to provide reasons for partial withdrawals, such as unemployment, a natural disaster, or the closure of a company or institution. Now, members will no longer need to provide any reasons or submit any documents with their application. This makes partial withdrawals much easier than before.

Why was this change considered necessary?

Previously, if an EPFO ​​subscriber was unemployed for two months, they could withdraw their entire PF and pension amount. Now, when they get a new job and rejoin the EPFO, pension issues arise. Previously, a minimum of ten years of service is required for pension eligibility. Now, when people withdraw their entire funds immediately after leaving their first job, this cycle is broken. Because the tenure of both the previous and new jobs cannot be combined, they must complete another ten years of service in the new job. In such a situation, if someone remains unemployed for not just one or two months, but for a full 12 months, they will be allowed to withdraw their entire PF balance, assuming they need the money.

Rules Changed Regarding Pension Amounts

At a meeting of the EPFO's Central Board of Trustees, Labor Minister Mansukh Mandaviya also set new rules regarding pension amounts. Similarly, pension amounts can now be withdrawn in 36 months instead of the current two months. This means that people may have to wait longer to withdraw their PF funds than before. This will meet their financial needs and eliminate any concerns about financial security after retirement.