EPF members can withdraw 75% of PF immediately after job loss, pension after 36 months, EPFO clarifies

Amid mounting criticism and confusion over new withdrawal norms, the Employees’ Provident Fund Organisation (EPFO) has issued a clarification on the revised rules for accessing provident and pension funds in case of unemployment. The retirement body said that members can now withdraw up to 75% of their EPF balance “immediately” after losing their job, while the pension (EPS) accumulation can be withdrawn only after 36 months of unemployment.

The clarification follows a wave of concern after the Central Board of Trustees (CBT) meeting on October 16, where it was decided to extend the waiting period for final EPF settlement from two months to 12 months, and for EPS withdrawal from two months to 36 months. The decision drew criticism from members who viewed it as restrictive, prompting the EPFO to issue a detailed response through social media and official releases.

EPF withdrawal new rules

In a post on X (formerly Twitter), EPFO termed as “myth” the belief that unemployed members cannot withdraw their PF funds. “Fact: Members can withdraw up to 75% of their balance immediately if unemployed, without any waiting period. The remaining 25% can be withdrawn after 12 months,” the post clarified.

This marks a departure from earlier rules where members had to wait two months after job loss to withdraw any funds. However, ambiguity remains over the interpretation of the term “immediately” — whether it implies instant withdrawal after job loss or after formal unemployment verification.

A PIB release by the Ministry of Labour and Employment further explained that full withdrawal (100%) of the PF balance, including the remaining 25%, will still be permitted in specific cases such as retirement after age 55, voluntary retirement, retrenchment, permanent disability, incapacity to work, or emigration.

EPS full withdrawal

The more significant change involves the Employees’ Pension Scheme (EPS-95). Members will now be able to withdraw their pension fund only after 36 months of unemployment, instead of the previous two-month rule.

According to the Labour Ministry, this shift is intended to encourage members to complete 10 years of service to qualify for a lifetime pension and to ensure long-term financial security for their families. “Earlier, frequent withdrawals caused breaks in service, leading to rejection of many pension cases,” the ministry noted.

Ramesh Krishnamurthi, Central Provident Fund Commissioner, told CNBC-TV18 that the earlier system encouraged premature settlements that disrupted pension eligibility. “People were exiting their full EPF membership after job loss and rejoining later, losing valuable pensionable service,” he said.

Withdrawal categories simplified

The EPFO has also simplified the withdrawal categories, reducing them from 13 to just three broad heads:

Essential needs (illness, education, marriage)

Housing needs

Special circumstances or emergencies

Partial withdrawal limits have been made more flexible — members can now withdraw up to 10 times for education and 5 times for marriage, compared to the earlier combined limit of three. Under illness or emergency categories, full eligible amounts can be withdrawn twice a year without additional documentation.

The minimum service period for certain withdrawals has been adjusted too — members can now withdraw for housing after 12 months of membership (down from five years), and for education or marriage after seven years.

Why the change?

EPFO data reveals that nearly 50% of members have less than Rs 20,000 at final settlement, while 75% of pension withdrawals occur within four years of joining. Officials say frequent full withdrawals left members financially vulnerable at retirement.

“The new framework will ensure continuity of service, higher final settlement, and better long-term security,” the ministry said.

By tightening early withdrawal norms but simplifying genuine needs-based withdrawals, EPFO aims to balance short-term liquidity with long-term pension sustainability, ensuring members retire with more meaningful savings.