EPFO Struggles as Young Workers Withdraw Full PF Savings

The Employees’ Provident Fund (EPF) offers an attractive 8.25% interest on deposits, making it a great tool for long-term savings. However, many young subscribers withdraw their entire PF balance when changing jobs, missing out on the benefits of compounding.

EPFO’s Growing Concern

The Employees’ Provident Fund Organisation (EPFO) is worried about the rising trend of early withdrawals. Officials point out that keeping PF savings intact can help employees secure their retirement, buy a house, or fund their children’s education or marriage in the future. The organisation is now exploring strategies to encourage long-term savings.

Current EPF Withdrawal Rules

Under existing rules:

• Full withdrawal is allowed after retirement.
• Up to 75% withdrawal is permitted after one month of unemployment.
• 100% withdrawal is allowed after 2 months of unemployment.

Though these rules are meant to support those facing financial difficulties, many subscribers resign from their jobs and withdraw their entire PF balance after 2 months.

Why Young Subscribers Withdraw Early

Young workers withdraw their PF funds for various reasons:

• Investing in higher-return options like stocks.
• Using the money for immediate purchases or expenses.
• Thinking that retirement is far away, so savings can wait.

Officials stress that early savings lead to a substantial retirement fund, especially since most private-sector employees do not receive pensions.

Rising Withdrawals and EPFO’s Expansion

Between April 1, 2024, and March 7, 2025, EPFO received 7.1 million final PF withdrawal claims. It settled 50 million claims, disbursing ₹55,133.52 crore. Over the past decade, the number of EPFO accounts has grown from 117 million (FY15) to 325 million (March 2025), reflecting a significant rise in subscribers.

Conclusion

The EPFO is looking for ways to encourage young workers to keep their PF savings intact. By maintaining their accounts, they can enjoy higher returns and financial security in the long run.

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