EPFO Defends New 25% PF Lock-In Rule for Long-Term Security
EPFO Chief Ramesh Krishnamurthi has defended the new rule requiring members to keep 25% of their provident fund balance locked during withdrawals, stating it ensures long-term financial security for workers.
Key Takeaways
- 25% of PF balance now locked during withdrawals
- Locked amount earns 8.25% annual interest
- Withdrawal waiting period extended from 2 to 12 months
- Full withdrawal possible after 12 months unemployment
Addressing Premature Withdrawals
Krishnamurthi explained that many employees withdraw their entire PF savings after job changes, leaving minimal retirement funds. The new policy allows 75% withdrawal while keeping 25% invested as a safety net.
“Frequent withdrawals harm financial stability,” he noted during a CNBC-TV18 interview. EPFO data reveals 75% of members exit the scheme within three years, with many closing accounts with less than ₹20,000.
Extended Waiting Period Benefits
The withdrawal waiting period has increased from two months to twelve months post-employment. While critics cite hardship concerns, Krishnamurthi clarified this maintains eligibility for pension and insurance benefits tied to long-term membership.
Special Withdrawal Provisions
Employees can still withdraw 100% of savings twice annually without providing reasons. Complete withdrawal of the locked 25% is permitted after 12 months of continuous unemployment.
