Eroding Retirement Corpus: EPFO's Decision to Raise Full Withdrawal Wait Time
According to Labour Ministry data, frequent early withdrawals have weakened the retirement safety net.
Officials have detailed the rationale behind extending withdrawal timelines and creating a uniform 12-month lock-in for all partial withdrawals, as the government prepares to notify the new EPFO rules.
- About 50% of EPF members have less than Rs 20,000 at the time of final settlement.
- 75% of EPF members have less than Rs 50,000 at the time of final settlement.
- 87% of EPF members have less than Rs 1,00,000 at the time of final settlement.
- Roughly 75% of pension withdrawals happen within four years.
Officials hinted that this trend leaves employees with "insufficient PF balance or lack of pensionable service at the time of retirement," undermining the very purpose of the provident fund system.
Author's summary: EPFO raises full withdrawal wait time to 12 months due to frequent early withdrawals.