EPFO’s New Digital Rules

Do you remember the days when the idea of withdrawing money from the PF account was more like a helter-skelter than a relief? When people were forced to go through multiple complex provisions, and their PF balance withdrawal was limited to only the employee’s share? Imagine not being able to withdraw your money, which you have been saving for a major emergency — whether medical urgency, education, or other urgent requirement — frustrating, right?

But what if we tell you that you can now withdraw your PF balance through an ATM? Yes, you read that right. Although this is not yet available, EPFO is working on bringing a major change to make this possible. So, let’s get started.

What is EPFO (Employees’ Provident Fund Organisation)?

Before we begin, let’s first understand the role of EPFO. It’s essentially an Indian government body that helps salaried workers save money from their salary for retirement and provides social security benefits. 

To understand how EPF works, think of a child saving money in a gullak. Just like they set aside a portion of their pocket money in a piggy bank every month to buy a PS5, parents also contribute something at the same time. When the time comes, the child gets all the money. 

An employee contributes 12% of their basic salary plus DA, and their employer contributes the same percentage every month. This earns interest set by the government.

EPFO’s New Rule

Now that you understand the role of EPFO and how EPF works, let’s dive into the new rule and the changes it’s planning to bring. EPFO is now planning to ease the withdrawal of the PF balance by allowing all the employees to withdraw their PF amount through an ATM.

EPFO will issue an ATM card to all employees, which will be linked to their PF account. You can also transfer your PF balance directly to your UPI ID. All you have to do is enter your UPI ID on the EPFO portal or app, verify the details, and avail your money immediately; about 95% of claims get approved automatically, excluding the employer’s role.

Now the question is, what is required for this process? Well, not much; it just asks for six things:

• An activated UAN (Universal Account Number)
• A mobile number linked to UAN
• An updated KYC

• Address Proof
• Identity Proof
• One bank account and a cancelled check with the IFSC code and bank account number.

PF Balance Withdrawal Limits

There’s another question: can you withdraw the entire PF balance? Well, the answer is NO; it has some limitations. Kindly don’t frown after reading the word ‘limitation.’ Even love has certain limits, so why not PF withdrawals? Just kidding! However, the withdrawal rule depends on the employee’s given reason and their employment time period.

Let’s take a look at them:

• You are allowed to withdraw 90% of your PF balance if you have completed 5 years of employment and are willing to purchase a house or require money for any construction work.
• If you need money for marriage or education and have completed 7 years of employment, then you can withdraw 50% of your PF balance along with interest.
• You can withdraw 95% of your total PF balance if your age is more than 54 years or within one year of retirement age. Note: This is for members still employed.
• In case of a medical emergency, you can withdraw the lower amount of your PF share with interest or 6 months of basic wages and DA with interest, whichever is lower. Let’s understand this with an example.

Imagine Rahul works in a company; his basic salary is Rs 20,000, and DA is Rs 5000 per month. If you add his basic salary and DA, it will be Rs 25,000 per month. Let’s say, his PF contribution with interest is Rs 1,80,000.

Now, suppose Rahul wants to withdraw his PF balance due to some medical emergency, and according to the EPFO’s new rule, he can withdraw either his basic salary plus DA or his PF contribution with interest, whichever is lower.

So, if we compare:

6 months basic salary + DA     

25,000*6 = 1,50,000

And his PF balance is = 1,80,000

As you can see, 1,50,000 is lower, and he is only allowed to withdraw that amount; he cannot take out his PF amount.

Pension Contribution Flexibility

EPFO now allows you to choose the amount of money contributed to the PF account. 

• Earlier, contributing 12% of your salary to your PF account was mandatory; however, now it is planning to raise that percentage. Of course, the decision is yours.
• The salary limit has been increased to Rs 21,000 to pass the EPF eligibility. If your salary exceeds Rs 21,000, you are allowed to choose whether you wish to contribute to the EPF account or not.

EPFO’s Digital Upgrade

EPFO has also made it mandatory for all employees to update their KYC through Aadhaar eKYC. It has also enabled UAN generation or activation through face authentication in the UMANG app. Therefore, if your UAN isn’t activated, then you can now do that effortlessly with the UMANG app.

What is the UMANG App?

UMANG stands for Unified Mobile Application for New-Age Governance. It’s the Indian Government’s initiative, which offers all local, central, or state government services to its citizens; they can also avail private utility payments — all in one app. Basically, you can access Aadhaar, EPFO, DigiLocker, gas booking, tax payment, and more.

It’s a crucial part of India’s digital service program, aiming to bring government services closer to its citizens.

Advantages of EPFO’s New Rule

The new changes of EPFO will eventually make employees’ lives a lot easier:

• You can directly edit your PF details online without your employer’s assistance.
• You can withdraw your PF balance at any time without your employer’s consent.
• You get easy and fast withdrawals for illness, marriage, housing, or educational needs.
• 95% of withdrawals settle automatically in hours or minutes, instead of days.

On a Parting Note

EPFO’s digital upgrade is a game-changer for all employees. Now, they will deal with less paperwork, get faster access to their own money, and have full control over their PF. All they have to do is activate their UAN, update KYC, and relish the benefits.

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