Following widespread public backlash, the government has clarified the recent changes made to the Employees’ Provident Fund Organisation (EPFO) and Employees’ Pension Scheme (EPS) withdrawal rules. Officials say the revised framework is designed to safeguard long-term retirement savings while still offering members easier access to funds when needed.
Under the new guidelines, the EPFO has merged 13 different partial withdrawal provisions into a single, simplified system. Members can now withdraw up to 75% of their EPF balance—comprising both employee and employer contributions along with interest—in cases such as unemployment or job loss. The remaining 25% must stay in the account to maintain a savings cushion for retirement.
The government emphasized that this change will help prevent premature depletion of provident fund balances, a problem previously seen when employees withdrew most of their corpus during short-term financial distress. The retained portion is meant to ensure some financial stability in later years.
Another key change concerns the Employees’ Pension Scheme (EPS). Members will now be able to withdraw their accumulated pension amount only after 36 months of unemployment, a significant shift from the earlier two-month waiting period. The move aims to encourage subscribers to stay invested in the pension fund long enough to qualify for long-term pension benefits and to provide continued family protection.
Officials explained that the reforms seek to balance liquidity with the original purpose of the EPF and EPS — providing financial security after retirement. By simplifying withdrawal rules and extending waiting periods, the government hopes to strengthen the social security net while reducing the misuse of funds for non-essential expenses.
However, critics argue that the new withdrawal restrictions could burden those facing sudden job loss or financial emergencies. They contend that the extended waiting period for pension withdrawals limits flexibility for workers in transition.
Despite differing opinions, the government maintains that the changes are a step toward building a more resilient retirement savings system — one that combines short-term accessibility with long-term financial protection for millions of EPFO members.