EPF Withdrawal Rule: The government is considering allowing full or partial withdrawal from EPF every 10 years. This can eliminate the need to wait till retirement. Know why it is considering changes in the withdrawal rules and why experts are warning about it.
EPF Withdrawal Rule: The central government is considering making a big change in the withdrawal rules from the EPF account. Now Provident Fund account holders (EPF subscribers) may be allowed to withdraw their entire deposit amount or part of it once every 10 years. Currently, employed employees have to wait till retirement to withdraw the entire amount.
Full withdrawal every decade?
Two senior government officials told Moneycontrol that the central government is seriously considering the proposal of EPFO (Employees’ Provident Fund Organisation). Under this proposal, members will be able to withdraw money from their account every 10 years.
According to an official, “Every member’s corpus increases every decade. They should have the freedom to decide where and how they want to use it.”
What is the rule at present?
At present, full withdrawal from EPF is possible only in two situations – when the member retires (usually at the age of 58), or when he has been unemployed for more than two months. Apart from this, partial withdrawal from EPF is allowed under certain circumstances.
Convenience for young employees?
If this proposal is implemented, young members will be able to withdraw their entire EPF amount even at the age of 30 or 40. However, an official also indicated that the government may limit the withdrawal to only 60%, not the entire amount. This option is currently under consideration.
What is the government’s objective?
According to an official, “Most of the policy relaxations related to EPF in the last one and a half years have been brought with the aim that members can use their money in a more flexible and convenient manner. The proposal of 10-year withdrawal is also part of this thinking.” Expert opinion: Benefit or danger? However, not all experts fully agree with this proposal. They believe that even though this scheme may provide short-term relief, it may weaken the basic spirit of EPF. According to experts, the purpose of EPF is to create a safe fund for retirement, not to meet short-term needs. Akshay Jain, partner at Saraf and Partners, says, “The terms and conditions of any such proposal should be made very thoughtfully, so that short-term financial needs do not outweigh long-term security.” What will be the benefit? Rohitashv Sinha, partner at King Stubb & Kasiva, believes that greater access to PF can increase liquidity in the market, especially in the real estate sector. This will benefit both the economy and the employed.
But Sinha also added that frequent withdrawal exemptions can lead to a decrease in savings for the future. Especially, when the money is over at the time of need.
IT system can create a bottleneck
Experts have also warned that before implementing such changes, EPFO ​​will have to strengthen its IT infrastructure. The existing system is not capable of frequent withdrawal requests and processing. This can increase the risk of disturbances and fraud.
Recent changes in withdrawal
At present, partial withdrawal from EPF accounts is allowed only for certain needs. Such as housing purchase, treatment, education or marriage. But recently the rules have been relaxed.
From July 2025, members can now withdraw up to 90% of their EPF funds to buy land or build a house. Earlier this facility was available only to those who have contributed to the account for five consecutive years, but now this limit has been reduced to three years.
Auto-settlement limit increased
EPFO issued a notification on June 24 stating that the auto-settlement limit for advance claims without additional approval has been increased from ₹ 1 lakh to ₹ 5 lakh. Its purpose is that members can get funds quickly in case of an emergency.
What is EPF?
EPF is a major retirement savings scheme of India, which is overseen by EPFO. In this, both the employee and the employer contribute a part of the salary. Interest is also received on this deposit amount. Its purpose is to ensure financial security after retirement.
If the government implements this proposal, it can prove to be the biggest structural change in the history of EPF.
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