EPF settlement to take 12 months, pension withdrawal extended to 36 months
New Delhi, Oct 14, 2025
Workers changing jobs will now have to wait up to a year before they can withdraw their provident fund fully
The Employees’ Provident Fund Organisation (EPFO) has extended the time allowed for premature EPF settlement and final pension withdrawals. According to news agency PTI, premature EPF settlement will now be allowed only after 12 months of a person leaving an organisation where they are employed, up from the previous two months. Final pension withdrawal under the Employees’ Pension Scheme (EPS) can be made only after 36 months, up from two months.
More time to access funds
For many employees, provident fund savings act as an emergency buffer. Extending the premature settlement period from two months to a year may leave workers without quick access to funds for urgent expenses, such as medical emergencies, home repairs, or debt repayments. Similarly, delaying final pension withdrawal to 36 months could disrupt retirement planning for members who rely on pension continuity or wish to consolidate their funds.
Practical implications for employees
Premature EPF settlement: Workers changing jobs will now have to wait up to a year before they can withdraw their provident fund fully, potentially affecting short-term liquidity.
Final pension withdrawal: EPS members who expected to claim their pension shortly after leaving service may face cash flow challenges, especially retirees planning post-retirement expenses.
Partial withdrawals
While the EPFO has liberalised partial withdrawals, allowing access to up to 100 per cent of eligible balances for essential needs, housing, and emergencies, these do not fully substitute for the convenience of premature final settlement. The extended timelines mean members must carefully plan withdrawals.
Interest benefits
EPFO has retained a minimum 25 per cent balance requirement in accounts, allowing members to earn 8.25 per cent interest per annum. While this preserves long-term savings, it may cause inconvenience to members needing access to their funds immediately.
The extended settlement and pension withdrawal periods mark a shift towards long-term retirement security, but they also impose a short-term burden on members who expect faster access to their money.
[The Business Standard]
