The Employees' Provident Fund Organisation (EPFO) subscribers may soon have the option of withdrawing their provident fund directly via the Unified Payment interface (UPI), since the government has finished testing this new feature, according to PTI.
The PTI report quoted Labour Minister Mansukh Mandaviya as saying that EPFO has been taking several steps to improve services for members and make fund withdrawals faster and easier.
Testing of UPI withdrawal system completed
The minister announced that the testing phase for the UPI-based EPF withdrawals has been completed successfully. Once launched, EPFO members will be able to transfer their eligible EPF funds directly into their bank accounts via the UPI payment gateway.
Part of EPF balance to remain locked
The Labour Ministry has been working on a system under which a part of the EPF balance will remain locked while the remaining eligible amount can be withdrawn instantly through UPI-linked bank accounts.
EPFO members can transfer money using UPI PIN
Subscribers will be able to view the amount available for withdrawal and transfer it to their bank accounts linked with EPFO records. To complete the transaction securely, users will have to authenticate it using their UPI PIN.
EPF funds can be used immediately after transfer
Members can use the funds immediately for digital payments, transfers, or cash withdrawals through ATMs via debit cards once funds have been transferred.
What is the current process for EPF withdrawal?
Till now, EPFO subscribers had to submit withdrawal claims to access their PF savings, and the process could be long. However, under the auto-settlement system, eligible claims are processed electronically without manual intervention within three days of application.
Auto-settlement limit of EPF raised to Rs 5 lakh
Also, it must be noted that the auto-settlement limit has already been increased from Rs 1 lakh to Rs 5 lakh. This allows members to quickly access their PF money for needs such as medical treatment, education, marriage and housing expenses.
PF withdrawal limits
| Uniform eligibility period | Earlier, eligibility periods varied up to seven years. Now, all withdrawals have a uniform eligibility period of 12 months. |
| Key benefit for employees | Employees can now withdraw more money and at an earlier stage after completing just 12 months of service. |
| Why 25% balance retention introduced | EPFO said repeated withdrawals were leaving members with very low retirement savings. Therefore, 25% of contributions must remain in the account to ensure a retirement safety net. |
| PF balance data at retirement | Around 50% of PF members had less than Rs 20,000 balance and 75% had less than Rs 50,000 at final settlement due to repeated withdrawals. |
| Impact of repeated withdrawals | Frequent withdrawals prevented workers from benefiting from compounding returns of 8.25%, reducing long-term social security benefits. |
| Withdrawal during unemployment | Members can withdraw 75% of PF balance immediately during unemployment. The remaining 25% can be withdrawn after one year. |
| Cases where full withdrawal allowed | Full PF withdrawal is allowed after retirement at 55 years, permanent disability, incapacity to work, retrenchment, voluntary retirement or permanently leaving India. |
| Pension eligibility unchanged | The proposed changes do not affect pension eligibility at the age of 58 years. |
