The Labour Ministry said that a social media post has made misleading claims regarding recent reforms and provisions under the EPFO.
“The post distorts facts related to withdrawal rules, eligibility conditions, and access to members’ provident fund balances, creating confusion among subscribers. It is clarified that the claims being circulated are factually incorrect and grossly misleading,” the Labour Ministry says.
On Wednesday, Trinamool Congress Member of Parliament Saket Gokhale had criticised the government’s move to make amends in the existing EPFO rules. In a social media post on X, he had said the amendments are an ‘open theft of salaried people’s own money’. In its statement, the Ministry of Labour, however, explained the revised rules step by step.
“There have been misleading statements published on social media about recent changes and provisions made by the Employees’ Provident Fund Organisation (EPFO). In order to confuse subscribers, the message misrepresents information about eligibility requirements, withdrawal policies, and access to members’ provident fund balances. The allegations that are being spread are explained to be blatantly deceptive and factually false,” said the Ministry in its release.
Here is how the ministry has explained the revised EPFO rules.
EPF withdrawal rules allow access to higher withdrawal amounts
The Ministry says that too many provisions for partial withdrawals led to confusion for members and frequent rejection of withdrawal claims. The existing 13 types of partial withdrawal provisions have now been merged into one unified and simplified framework. Prior to the simplification of norms, the member was allowed to withdraw only the employee contribution and interest ranging from 50-100%. Now, the withdrawable amount will also include employer contribution besides employee contribution and interest.
75% withdrawal allowed immediately
The Ministry says that in case of unemployment, 75% PF balance ( that includes employer and employee contributions and interest earned) can be withdrawn immediately. The remaining 25% can also be withdrawn after one year. Full withdrawal of the entire PF balance (including the minimum balance of 25%) is also allowed in case of retirement after attaining 55 years of service, permanent disability, incapacity to work, retrenchment, voluntary retirement or leaving India permanently, etc.
25% minimum balance requirement
The Ministry says that it has announced the 25% minimum balance requirement in the EPF account since at the time of retirement for most subscribers, the PF balance was insufficient due to repeated withdrawals.
At the time of final settlement, 75% of PF members had less than Rs 50,000 in their PF balance, and 50% had less than Rs 20,000. Workers with lower earnings missed out on increased social security at the end of their working lives because they were unable to realise the benefits of compounding at 8.25% due to repeated withdrawals. In order to offer long-term social security and a good corpus after retirement as a safety net, CBT decided that 25% of the contributions must be maintained in the EPF account.
EPS pension rule of 36 months
The proposed provision allows the member to withdraw pension accumulation after 36 months instead of 2 months.
The Ministry says that pension entitlement at the age of 58 years is still unaffected by the proposed changes. A member can withdraw the accumulation in pension account before completing 10 years of service at any point of time in these 10 years.
However, to qualify for a pension at retirement, a member must complete at least 10 years of EPS membership. About 75% of pension members withdraw their entire pension amount within four years of service, i.e., in less than 10 years, ending their membership and making the member ineligible for future pension and social security benefits.
Additionally, if the pension fund is not withdrawn, the member’s family remains eligible for pension benefits for up to three years even after contributions stop—in case of the member’s death. Once withdrawn, this benefit is lost.
In order to encourage members to meet the 10-year eligibility for getting pension and to allow his/her family to be eligible for benefits in case of his/her death, the proposed provision allows the member to withdraw pension accumulation after 36 months instead of 2 months. This will ensure long-term social security in the form of pension for the member and his family.
