UPI-based EPF withdrawals may start by April: What changes for members

The proposed system promises quicker access to EPF money, with limits

Employees’ Provident Fund Organisation (EPFO) members may soon be able to withdraw a portion of their provident fund savings using the Unified Payments Interface (UPI).

 

The labour ministry is working on a new withdrawal mechanism that could be rolled out as early as April, reported by PTI.

 

The proposed system is part of a broader effort to simplify EPF withdrawals and reduce the heavy volume of claims processed by EPFO each year.

 

How EPF withdrawals work at present

Currently, EPFO members must submit an online claim to withdraw money from their provident fund account. While most claims are processed digitally and many are settled automatically within a few days, members still need to apply for each withdrawal. 

 

 

With EPFO handling several crore claims annually, the existing process can feel cumbersome, particularly for members who need quick access to funds for emergencies or planned expenses.

 

What is changing under the UPI-based system

Under the proposed framework, eligible EPF amounts can be transferred directly to a member’s bank account through UPI, without filing a traditional withdrawal claim. Members will be able to see the amount available for withdrawal and complete the transfer using their UPI PIN.

 

The system will work only for bank accounts that are already linked and verified with EPFO records, ensuring secure and seamless transactions.

 

How much EPF money can be withdrawn

 

Recent reforms approved by EPFO’s Central Board of Trustees allow members to withdraw up to 100 per cent of the eligible provident fund balance, including both employee and employer contributions, depending on the purpose and eligibility conditions.

 

However, not the entire balance will be freely accessible through UPI.

 

Why will a portion of EPF balance remain locked?

 

Around 25 per cent of total EPF contributions will be retained as a minimum balance in the account. This is intended to ensure that members continue to earn EPFO’s annual interest, currently 8.25 per cent, along with long-term compounding benefits.

 

The idea is to balance short-term liquidity needs with the core objective of building a retirement corpus.

 

When the new facility may become available

 

The labour ministry and EPFO are currently addressing software and system integration challenges. If implementation proceeds as planned, the UPI-based withdrawal facility could be available by April, covering a large majority of EPFO members, as reported by PTI.

 

Why EPFO cannot allow full bank-like withdrawals

 

Unlike banks, EPFO does not hold a banking licence and cannot permit unrestricted withdrawals from provident fund accounts. The UPI-based transfer mechanism is designed to improve ease of access while staying within the existing regulatory framework.

 

Simplified rules for partial withdrawals

 

In October last year, EPFO also simplified partial withdrawal rules by merging multiple provisions into three broad categories:

 

Essential needs such as illness, education, and marriage

 

Housing-related requirements

 

Special circumstances

 

These changes enable documentation-free withdrawals and automatic settlement of eligible claims, further reducing delays for members.