75% withdrawal allowed after job loss, full after a year, clarifies EPFO

The Employees’ Provident Fund Organisation (EPFO) on Wednesday clarified that members can withdraw 75 per cent of their provident fund amount immediately after leaving a job, while the entire balance can be withdrawn after one year of unemployment.

A statement from the labour ministry said, “Seventy-five per cent of the amount can be withdrawn immediately after leaving the job, and the full amount can be withdrawn after being unemployed for one year. Frequent withdrawals earlier caused breaks in service, leading to rejection of many pension cases. At the time of final settlement, employees were left with very little money.”

Clarification follows confusion over new withdrawal rules

The clarification comes after EPFO’s revised withdrawal norms, announced on Monday, drew criticism on social media. Some users claimed that under the new rules, those losing their jobs would have to wait for 12 months to withdraw their EPF balance instead of two months, as allowed earlier.

Labour Minister Mansukh Mandaviya explained that the revised norms were designed to ensure employees maintain eligibility for pension benefits.

“The idea behind retaining 25 per cent of the amount for a year is that the 10-year service tenure to avail pension is not disrupted,” Mandaviya said.

He added, “EPF withdrawal norms have been made simpler now. If someone loses their job, then 75 per cent of the amount can be withdrawn immediately, and after one year, the facility to withdraw the entire amount will be available. With these reforms, the employee's service continuity will be maintained, ensuring their social and economic security.”

Half of members had less than Rs 20,000 at settlement

According to official sources, the changes were prompted by data showing that 50 per cent of EPF members had less than Rs 20,000 at the time of final settlement, and 75 per cent of pension withdrawals occurred within four years of contribution.

“EPFO’s data shows that the same person, after two months of unemployment and after withdrawing the entire PF amount, is again joining another company. Members are thus left with less money at the end of service and also lose pension eligibility. The withdrawal norms have now been simplified into one uniform provision, making it easier to withdraw money without additional documentation,” the sources said.

Revised norms to take effect within two months

The revised withdrawal rules are expected to come into effect in the next one to two months, alongside relaxations for withdrawals related to education, illness, housing, and special circumstances, the officials added.