Govt notifies new EPF Scheme with revised partial withdrawal norms

The Employees’ Pension Scheme, 2026 came into effect on 29 June 2026 upon its publication in the Gazette.

• The scheme replaces the:
  • Employees’ Family Pension Scheme, 1971, and
  • Employees’ Pension Scheme, 1995.
• It has been notified under the Code on Social Security, 2020.

Eligibility

• Employees joining the Employees’ Provident Fund Organisation on or after 29 June 2026 are eligible if their wages are at or below the wage ceiling notified by the Central Government.
• Employees who were members (or eligible to become members) of EPS-1995 or the Employees’ Family Pension Scheme, 1971 before the commencement of the new scheme are also covered.

Key Features

• The following provisions remain unchanged:
  • Pension formula.
  • Employee and employer contribution structure.
  • Minimum pension.
• Major reforms include:
  • Simplified pension processing.
  • Revised investment framework for the pension fund.
  • 12% interest payable if EPFO delays settlement of a claim without a valid reason.

Partial Withdrawal Rules

• EPF members must retain at least 25% of their eligible member balance in their EPF account before making any partial withdrawal.
• The minimum balance requirement applies to both employee and employer contributions.
• Example:
  • Eligible balance = ₹1,00,000
  • Mandatory balance to be retained = ₹25,000
  • Maximum amount available for withdrawal = ₹75,000 (subject to eligibility conditions).

Permissible Reasons for Partial Withdrawal

The revised scheme expands the list of eligible purposes, including:

Housing

• Purchase of a house or flat.
• Purchase of land for house construction.
• Construction of a house.
• Repayment of housing loans.
• Repair or renovation of an existing house.

Up to 100% of the eligible balance may be withdrawn for:

• Medical treatment.
• Higher education.
• Marriage.

Service Requirement

• Partial withdrawals are permitted after completion of 12 months of service.
• Withdrawals under specified special circumstances can be made without providing additional justification, as per the scheme.

Early Pension

• Members may opt for early pension from the age of 50 years, provided they have completed at least 10 years of eligible service.
• The pension is reduced by 4% for every year it is drawn before the normal retirement age.

Sources: DD & ET

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