A major shift in how provident fund money is accessed is set to take effect soon, as EPFO subscribers are expected to withdraw funds directly into their bank accounts using UPI by April, according to a senior government source.
The labour ministry is working on a new system under which a portion of an employee’s provident fund will remain frozen, while a large share will be made available for withdrawal through bank accounts linked via the Unified Payment Interface. Subscribers will be able to view the eligible EPF balance available for transfer into their seeded bank accounts.
Under the proposed framework, members will use their linked UPI PIN to complete transactions, ensuring secure transfers. Once credited, the funds can be used freely, including for digital payments or cash withdrawals through ATMs using debit cards.
The Employees’ Provident Fund Organisation is currently addressing software-related issues to ensure smooth rollout of the system. Once implemented, the facility is expected to benefit around 8 crore EPFO members.
At present, EPFO members must submit withdrawal claims to access their funds, a process often seen as time-consuming. While the auto-settlement mode allows claims to be processed electronically within 3 days without manual intervention, members still need to apply. The auto-settlement limit has already been raised to ₹5 lakh from ₹1 lakh, helping members access funds quickly for illness, education, marriage, and housing needs.
EPFO, which handles about 5 crore claims every year, first introduced online auto-settlement during the COVID-19 period to provide faster financial relief. However, the new UPI-based system aims to remove the need for filing claims altogether, reducing both delays and administrative burden.
Officials clarified that EPFO cannot allow direct withdrawals from provident fund accounts like banks, as it does not hold a banking licence. Even so, the government is working to bring EPFO services closer to banking standards.
In October 2025, the Central Board of Trustees approved the simplification and liberalisation of partial withdrawal rules. These changes will be notified shortly after approval by Union Labour Minister Mansukh Mandaviya. The revised framework merges 13 complex provisions into a single rule covering Essential Needs, Housing Needs, and Special Circumstances.
Members will now be able to withdraw up to 100% of the eligible provident fund balance, including both employee and employer contributions. A minimum balance of 25% of contributions will be maintained at all times, allowing members to continue earning the current EPFO interest rate of 8.25% per year with compounding benefits.
These reforms aim to improve ease of access while protecting long-term retirement savings and enabling 100% auto-settlement of eligible partial withdrawal claims.
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