Big Boost for Employees: 100% PF Withdrawal Now Allowed, Major Policy Overhaul Announced by EPFO Ahead of Diwali
Big Boost for Employees: 100% PF Withdrawal Now Allowed, Major Policy Overhaul Announced by EPFO Ahead of Diwali
With Diwali just around the corner, the Central Government has gifted a major financial relief to salaried employees across the country. In a landmark decision, the Employees’ Provident Fund Organisation (EPFO) has officially permitted full withdrawal—yes, up to 100%—of the eligible balance in Provident Fund accounts.
This move is being hailed as a significant step towards employee welfare, making it easier for individuals to access their own funds in times of need.
The announcement came following the 238th meeting of EPFO’s Central Board of Trustees (CBT), chaired by Union Labour Minister Mansukh Mandaviya, held in New Delhi. This meeting proved to be a turning point for millions of working professionals.
For the first time, employees can now withdraw the complete contributions made both by themselves and their employers into their PF accounts. Earlier, such withdrawals were strictly permitted only during retirement or in cases of prolonged unemployment.
Alongside this, the Central Government has also decided to keep the interest rate on the General Provident Fund (GPF) unchanged for the third quarter of the financial year 2025–26. As per a notification from the Ministry of Finance, the GPF will continue to offer an annual interest rate of 7.1%.
GPF is a compulsory savings scheme primarily designed for permanent employees working under the Central or State Government, ensuring their long-term financial stability post-retirement.
What makes this development even more impactful is the simplification of previously complicated withdrawal rules. EPFO has scrapped the earlier set of 13 confusing provisions and restructured them into just three straightforward categories: essential needs such as education, marriage, and medical emergencies; housing-related requirements; and withdrawals under special circumstances.
Under the new structure, employees can now withdraw funds for education up to ten times and for marriage purposes up to five times.
Even more liberating is the removal of the mandatory requirement to state a reason for withdrawal under special circumstances. This key change is expected to reduce the rejection rate of withdrawal applications significantly, empowering members with more flexibility and control over their funds.
In an effort to increase accessibility further, the minimum service period required for partial PF withdrawals has now been reduced from several years to just 12 months. However, EPFO has added a thoughtful clause to ensure continued long-term benefits.
Even though employees can now withdraw the full balance, they are required to retain at least 25% of their total contribution in the account. This remaining balance will continue to earn annual compound interest, helping members build a secure retirement fund over time.
Another critical update pertains to the advance withdrawal period. EPFO has extended the timeline for accessing funds before maturity. Members can now withdraw advance amounts after 12 months instead of the earlier 2-month waiting period.
Similarly, the timeframe for claiming the final pension amount has been stretched from 2 months to 36 months, offering more breathing room and financial planning flexibility for employees approaching retirement.
