Labour Ministry, EPFO respond to criticism, defend new PF withdrawal rules
New Delhi, Oct 17, 2025
PF withdrawal New Rules: Members who become unemployed can withdraw 75% of provident fund balance immediately, they say after Trinamool MP's criticism
New rules for withdrawing money from provident fund accounts intend to simplify processes and strengthen social security for salaried people, said the government after Trinamool Congress MP Saket Gokhale’s X post called the norms “shocking and ridiculous”.
“The claims being circulated are factually incorrect and grossly misleading,” said the Labour Ministry and the Employees’ Provident Fund Organisation (EPFO) separately on X after criticism of recent changes to the Employees’ Provident Fund (EPF) and Employees’ Pension Scheme (EPS).
Gokhale had said changes in rules about making withdrawals were an “open theft of salaried people’s money.” The ministry argued the rules will benefit members these ways:
EPFO has merged 13 different provisions for partial withdrawals into one framework. Earlier, employees could only withdraw between 50 per cent and 100 per cent of their own contribution and interest.
Under revised rules:
The withdrawable amount now includes both employer and employee contributions plus interest.
This simplification aims to reduce confusion and rejections of claims caused by overlapping provisions.
Higher withdrawal flexibility during unemployment
Members facing unemployment can now withdraw 75 per cent of their PF balance immediately, including both contributions and accrued interest.
The remaining 25 per cent can be withdrawn after a year of unemployment.
Full withdrawal remains permitted in cases of retirement after 55 years, disability, retrenchment, voluntary retirement, or permanent migration abroad.
25 per cent minimum balance rule for long-term benefits
To ensure members retain adequate savings for retirement, the EPFO has introduced a 25 per cent minimum balance requirement in EPF accounts.
According to ministry data:
Nearly 75 per cent of members had less than ₹50,000 at retirement, and
Half had less than Rs 20,000, mainly due to repeated early withdrawals.
Maintaining a minimum balance allows members to benefit from compounding interest (currently 8.25 per cent), ensuring a stronger retirement corpus.
EPS withdrawal after 36 months
The ministry also clarified changes to the EPS withdrawal norms.
Members can now withdraw their pension accumulation after 36 months of non-contribution, instead of the earlier two months.
Pension eligibility at 58 years of age remains unchanged.
This move aims to discourage premature withdrawals — as about 75 per cent of members withdraw their pension within four years, losing future pension rights. Keeping funds longer also ensures that, in case of a member’s death, the family continues to receive benefits for up to three years.
The government said the reforms were designed to enhance long-term financial security rather than restrict access to funds. The objective, it added, is to help workers build a meaningful retirement corpus and safeguard their families’ future.
[The Business Standard]
