EPF money via UPI by April? 6 FAQs on EPFO’s new withdrawal system for all members to know

Employees’ Provident Fund Organisation (EPFO) members are likely to be able to withdraw their provident fund money directly into their bank accounts through the Unified Payments Interface (UPI) by April, a senior government source told PTI.

The labour ministry is working on a new system aimed at simplifying EPF withdrawals and reducing the need for filing claims, benefiting nearly eight crore EPFO subscribers.

1. What is the present EPF withdrawal system?

Currently, EPFO members must file a withdrawal claim to access their provident fund money. Claims are processed online and, in many cases, settled automatically within a few days under the auto-settlement mechanism.

Despite digitisation, members are still required to apply for withdrawals, making the process time-consuming, especially as EPFO settles over five crore claims every year, mostly for EPF withdrawals, PTI was told.

2. What is the new UPI-based EPF withdrawal system?

Under the proposed system, EPFO members will be able to withdraw a permitted portion of their EPF directly into their bank accounts using UPI, without going through the traditional claim-filing process.

Members will be able to view the eligible EPF balance available for withdrawal and transfer it to their bank accounts, which are seeded with EPFO, using their UPI PIN, ensuring secure transactions, the source said.

3. How much EPF money can members withdraw under the new system?

According to the source, a certain portion of the EPF balance will be frozen, while a substantial part will be made available for withdrawal through UPI.

Following recent reforms approved by EPFO’s apex body, members will be allowed to withdraw up to 100 per cent of the eligible provident fund balance, including both employee and employer contributions, depending on eligibility and purpose.

4. Why will part of the EPF balance remain frozen?

Around 25 per cent of the total contributions will be maintained as a minimum balance in the member’s EPF account.

This is aimed at ensuring that members continue to earn EPFO’s high interest rate of 8.25 per cent per annum, with compounding benefits, helping them build a sizeable retirement corpus, the source explained.

5. When is the UPI-based EPF withdrawal facility expected to start?

The labour ministry and EPFO are currently addressing software-related issues to ensure smooth implementation. The facility is expected to be rolled out by April, benefiting around eight crore EPFO members, according to the source.

6. Why can’t EPFO allow direct withdrawals like banks?

Under the new framework, 13 complex withdrawal provisions have been merged into a single rule under three categories:

• Essential Needs (illness, education, marriage)

• Housing Needs

• Special Circumstances

The simplified rules will allow documentation-free withdrawals and enable 100 per cent auto-settlement of eligible partial withdrawal claims, significantly improving ease of living for EPF members.