Partial withdrawals from the Employees’ Provident Fund have surged more than 55-fold in the past decade as the government relaxed rules to make it easier for workers to tap into their retirement savings for expenses such as marriages, home purchases, and job losses.
Such withdrawals rose to nearly 2.95 crore in FY24 from just 5 lakh in FY17, a Moneycontrol analysis of EPF data shows.
The trend underscores how an instrument meant for retirement security has become a financial fallback for salaried workers. Easier withdrawal rules have turned the provident fund into a convenient source of liquidity during crises or life events.
“The government had eased some provisions, which led to a jump in the following years. The latest announcements would lead to a further rise in part-withdrawal requests,” said Samirendra Chatterjee, former Central PF Commissioner.
Turning Point in FY18
A major inflection came in FY18, when partial withdrawals jumped sharply after the government eased withdrawal provisions.
Withdrawals spiked to 11 lakh in FY18, then quadrupled to 40 lakh in FY19, and doubled again to over 83 lakh in FY20.
The Covid-19 pandemic triggered another surge as EPFO allowed withdrawals for income support during lockdowns, leading to claims more than doubling to 1.8 crore in FY21.
Climb Continues Post-Pandemic
Even after the pandemic, withdrawals have continued to rise. They rose from 2.38 crore in FY22 to 2.66 crore in FY23 and further to 2.95 crore in FY24.
The sustained increase points to greater awareness of withdrawal rules among members.
Rejections Ease, But Remain High
Rejection rates, though still significant, have moderated. About 25 percent of claims were rejected in FY21, compared with 22 percent in FY24, as EPFO digitised processes and simplified documentation.
Experts caution that while easier access has offered relief during crises, it also erodes long-term retirement savings.
“EPFO no longer seems like a pension instrument, but a savings account,” Chatterjee said.
The government earlier this week further eased withdrawal rules.
Instead of the 13 different categories under which money used to get locked, one uniform provision has been introduced, making it much easier to withdraw money without any documentation.
Moreover, the amount and frequency of withdrawal in most cases have been increased.
With the number of active EPF accounts expanding rapidly–the organisation manages a corpus of nearly Rs 25 lakh crore–the persistence of high withdrawals could reshape India’s approach to retirement security and savings behaviour.
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