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In a landmark move aimed at improving ease of living for salaried employees, the Employees’ Provident Fund Organisation (EPFO) is set to roll out a new UPI-based Provident Fund (PF) withdrawal system from April 2026. This reform is expected to benefit nearly 80 million EPFO subscribers across the country by making PF withdrawals faster, simpler, and completely digital.

According to sources quoted in media reports, the Ministry of Labour is working on a technology-driven framework that will allow EPF members to withdraw money directly into their linked bank accounts using UPI, eliminating the need for filing traditional withdrawal claims. Once implemented, this will mark a significant shift in how PF funds are accessed in India.

How the New UPI-Based PF Withdrawal System Will Work

Under the upcoming system, a portion of the EPF balance will remain secured or “frozen” as a safety measure, while the remaining eligible amount can be withdrawn instantly through a UPI payment gateway. EPFO members will be able to clearly view how much of their PF balance is available for withdrawal.

To complete a transaction, subscribers will simply use the UPI PIN linked to their bank account. Once the amount is credited to the bank account, it can be used freely for digital payments, transfers, or cash withdrawal through debit cards and ATMs. The entire process is designed to be secure, seamless, and user-friendly.

EPFO is currently addressing technical and software-related challenges to ensure smooth implementation. Once operational, this system is expected to significantly reduce delays and manual intervention in PF withdrawals.

Why This Change Is Important for EPF Members

At present, EPF withdrawals require members to submit claims, which can be time-consuming despite recent improvements. While auto-settlement allows certain claims to be processed within three days, members still need to apply for withdrawal.

The auto-settlement limit was earlier increased from ₹1 lakh to ₹5 lakh, enabling quicker access to funds for purposes such as medical treatment, education, marriage, and housing needs. Even so, EPFO processes over 50 million claims every year, most of them related to withdrawals. The new UPI-based system aims to reduce this workload and make fund access almost instantaneous.

Lessons from the Pandemic and the Push for Automation

EPFO first introduced auto-settlement of advance claims during the COVID-19 pandemic to provide immediate financial relief to employees. That initiative demonstrated the importance of faster fund access during emergencies. Building on that experience, the organisation is now moving towards a more advanced, fully digital withdrawal mechanism.

The long-term goal is to achieve near 100 percent auto-settlement of eligible withdrawals without paperwork, improving efficiency and member satisfaction.

Why EPFO Cannot Allow Direct Cash Withdrawals

One common question is why EPFO does not allow unrestricted direct withdrawals like banks. According to sources, EPFO does not hold a banking licence, which limits its ability to function exactly like a bank. However, the government is keen to ensure that EPFO services match the speed and convenience of modern banking systems, which is why innovative solutions like UPI integration are being developed.

In October 2025, the Central Board of Trustees (CBT), EPFO’s highest decision-making body, approved the simplification and liberalisation of partial withdrawal rules. These decisions have since received clearance from the Union Labour Minister and are expected to be officially notified soon.

Simplified Rules for Partial PF Withdrawal

To enhance ease of living, EPFO has streamlined its partial withdrawal rules. Earlier, there were 13 different provisions governing withdrawals. These have now been consolidated into a single, simplified framework grouped into three broad categories:

• Medical, education, and marriage-related needs

• Housing-related requirements

• Special circumstances

This consolidation reduces confusion and makes it easier for members to understand their eligibility.

How Much PF Can Be Withdrawn?

Under the revised framework, EPF members will be allowed to withdraw up to 100 percent of the eligible amount in their account, including both employee and employer contributions. However, to safeguard retirement savings, members must maintain a minimum balance of 25 percent in their EPF account.

This retained amount will continue to earn the current annual interest rate of 8.25 percent, along with compounding benefits, ensuring long-term financial security after retirement.

A Balanced Reform for Access and Security

The introduction of UPI-based PF withdrawals represents a balanced approach. On one hand, it ensures faster and easier access to funds during times of need. On the other, it protects retirement savings through mandatory minimum balances and continued interest accrual.

With simplified rules, enhanced flexibility, and a strong push towards automation, EPFO’s latest reforms are expected to significantly improve the financial experience of millions of employees. From April 2026, PF withdrawals may finally become as quick and convenient as everyday digital payments, marking a major step forward in India’s social security ecosystem.