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The labour ministry has implemented significant changes in the Employees’ Provident Fund Organisation (EPFO) operations to improve flexibility and efficiency. Union Labour Minister Mansukh Mandaviya announced that subscribers can now withdraw up to ₹1 lakh at once for personal needs, doubling the previous limit of ₹50,000. This change aims to better support individuals facing financial demands such as weddings or medical emergencies.

Enhanced digital system and new eligibility rules

In addition to raising the withdrawal limit, the EPFO has introduced a new digital system to streamline its operations and enhance responsiveness. The ministry has also relaxed rules to allow employees who have been with their current job for less than six months to access their funds, which was previously not permitted.

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Mandaviya highlighted that the increased withdrawal limit addresses the outdated previous cap, reflecting current consumption patterns and financial needs. The EPFO provides retirement savings for over 10 million employees in the organized sector, making it a crucial part of their long-term financial planning. With an interest rate of 8.25% for FY24, the EPFO’s offerings are closely watched by the salaried middle class.

Exemptions and future changes

The government has also made provisions for companies not previously part of EPFO to switch to the state-run retirement fund. This includes businesses with their own private schemes that predate the EPFO's establishment in 1954. Some companies, like Aditya Birla Ltd, have already expressed interest in making the switch.

Further changes are in the pipeline, including raising the income threshold for mandatory provident fund contributions from ₹15,000 to a higher amount. This change will allow employees earning above this threshold more flexibility in deciding their retirement savings and pension contributions. The EPFO mandates a 12% deduction from employees' salaries, with an equal contribution from employers.