EPFO's Withdrawal Reforms: Deciphering The Impact

·  EPFO's new partial withdrawal rules ease access to funds for subscribers. However, with partial and full EPF withdrawal now permitted after 12 months of starting service and leaving service, respectively, there are concerns over potential for fraudulent claims with eased rules

The Employees' Provident Fund Organisation (EPFO) has announced several changes to the Employee Provident Fund (EPF) and Employee Pension Scheme (EPS), aiming to make the retirement-focused scheme more flexible with simplified withdrawal rules and other enhancements. In the 238th CBT meeting, the Central Board of Trustees (CBT) announced changes ranging from liberalised partial withdrawals, increased withdrawal frequency, and an extended period for full withdrawal, to a digital transformation framework under the EPFO 3.0 version to modernise its services, auto settlement, and more. Amid this, the question arises whether these changes are helpful for EPF subscribers to keep their money intact and growing.

Here is the summary of withdrawal changes announced in the meeting in October 2025, and their possible impact:

Partial Withdrawal

Withdrawal from EPF has been a persistent challenge, and thus, EPFO had introduced auto settlement in 2020, but only for withdrawal for medical treatment for self or family members. The facility was later extended to the other withdrawal reason, too.

Now, CBT has made partial withdrawal rule further easier. Minimum service requirement is now reduced to 12 months for all partial withdrawals. The existing 13 provisions for withdrawal are also merged and grouped into three categories: essential needs, Housing Needs, and Special Circumstances.

• Essential needs – (illness, education, marriage)

• Housing Needs – (home buying, construction, and renovation)

• Special Circumstances – (natural calamity, outbreak of epidemic, closure of establishments, continuous unemployment, etc.)

The other change is in withdrawal frequency. Subscribers can now make 10 withdrawals for education and five for marriage purposes. Previously, this limit was three, combining education and marriage.

For withdrawals in special circumstances, members don't need to provide reasons anymore. Zero need for documentation can make advance claim settlement faster and makes way for 100 per cent auto settlement.

The government says that convenient partial withdrawals will help subscribers to meet their immediate cash needs without compromising their retirement savings.

However, Kunal Kabra, founder and CEO, Kustodian.life, a tech firm that provides claim support for EPF, Bank, and Shares, says, "Partial withdrawals are anyway easy and are now being eased further."

On increasing limit of the number of withdrawals, he points out, "How many people need money five times for marriage? Or take carrier breaks more than once? This will give more ways to people to raise fraudulent partial withdrawal requests, but not an actual help to over 99.99 per cent of the user base." 

Further, a subscriber can now withdraw 100 per cent of the eligible balance in the EPF account, including the employee and employer share. Notably, a minimum of 25 per cent of the contribution must always be maintained in the EPF account, and the remaining 75 per cent is eligible for withdrawal.

Full Withdrawal

Full withdrawal from EPF is now allowed only after 12 months and for EPS after 36 months, instead of the existing two-month period for both cases. However, the extended time lag for full withdrawal after leaving the job could leave many subscribers grappling with financial challenges.

Kabra says, "This change could ensure fewer people choose full closure of the PF account. However, new changes will add a lot of pain for people planning to move out of the country, as well as those dreaming of taking the plunge into entrepreneurship. In addition, since only a full withdrawal requires a full check, imagine going back to an ex-employer after one year to get an issue fixed. Considering all of it, I believe this to be an added unnecessary burden for the majority of the subscribers."

"Simple things (partial withdrawal) have become simpler and complex ones (full withdrawal) have become further complex", says he.

As the rules have been changed, there is an urgent need for EPFO to update its services as well. At the same time, subscribers also need to be financially aware to save money and remain invested to grow their funds.