The Centre is working to implement a 100 percent digital withdrawal system of Employees’ Provident Fund (EPF) to enable withdrawal from EPF account of millions of workers instantly through a QR code at ATMs or online transfer through UPI. EPFO is working to implement this system by mid-2026.
Now in the new framework of withdrawal of EPF amount, an EPFO member can check the amount of withdrawal eligible through UMANG app of EPFO, generate a QR code and withdraw the amount immediately from UPI-enabled ATM or through direct UPI transfer. Withdrawal through EPFO’s new framework of withdrawal will be paperless, instant and hassle-free and the amount will be credited to the account of member immediately as against days and weeks taken by EPFO to settle the claims through existing process of withdrawal of EPF amount.
The proposed EPFO 3.0 is part of the digital modernization of EPFO to make provision of provident fund services to its members faster and smoother by reducing processing time and minimizing human intervention. Under EPFO 3.0, members will be able to withdraw/ transfer their EPF account balance instantly through digital platform(s).
A revolution of sorts is on the cards for the EPFO. It will be one of the largest digital reforms in the country’s retirement savings space.
Will ATM-based EPF withdrawals impact pensions?
Clarification by Ministry of Labour and Employment. EPF amount can be withdrawn by employee as well as employer through ATM for the amount contributed by employee towards his/her Provident Fund account, up to 75% of the amount in his/her Provident Fund account.
However, the pension shall remain unaffected since EPS is a defined benefit scheme and pension of member is calculated on the basis of Eligible Service rendered by him/her. Even if member withdraws his/her EPF contributions, his/her EPS service record shall not be impacted and he/she would continue to remain eligible for pension as and when he/she attains the age of superannuation or retires from service, provided he/she has completed at least 10 years of Eligible Service.
What did the Labour Ministry clarify?
The Ministry of Labour & Employment has clarified that Pension would continue to as before and would not get affected in any way due to the proposed EPF withdrawals through UPI. Pension entitlement also would continue to as before at the age of 58.
A member can withdraw the amount accumulated in pension account before completing 10 years of service in any time of these 10 years. However, for entitlement of pension, the member should have rendered minimum 10 years of service in EPS contributing employment.
Even if the member withdraws a substantial part of the EPF account prior to retirement, his/her EPS service record would not get affected and the member would continue to be eligible for pension provided he/she completes the required 10 years of eligible service.
What actually changes?
Currently, a member can apply for withdrawal of his EPF online on EPFO portal or even submit physical application at EPFO office after verification of KYC details of member. Employer also needs to verify and approve the withdrawal application of employee. It generally takes minimum 7-10 days for processing of withdrawal claim and getting the disbursed amount in bank account of member. Withdrawal claims of more than Rs 1 lakh are verified manually by EPFO and if any discrepancy is found in documents submitted by member or employer, then processing of withdrawal claim is delayed or claim is even re-initiated.
In EPFO 3.0, a member can check the amount of his/her eligible PF withdrawal balance through UMANG app and generate a QR code to withdraw funds instantly from a UPI enabled ATM or through a direct UPI transfer. Withdrawals up to amount of Rs 5 lakh can be instantly settled without any intervention of employer.
When will EPFO 3.0 launch?
Labours Minister Mansukh Mandaviya has on Friday confirmed the report stating that EPFO has completed the testing of UPI withdrawal of EPF and it will be launched soon.
“Testing of UPI facility for withdrawal of EPF has been completed and service would be launched soon,” Minister Mandaviya said in a statement.
The Minister did not state a date of launch but said the organization had completed testing of the process where members could withdraw their EPF using the UPI payment gateway and the amount would be credited into the bank account of the member immediately.
As workforce in India is growing formally. Ministry of Labor and Employment, Government of India has put out some great data around formal workforce growth in India. In financial year 2024-25, over 1.29 crore formal workers were added to payrolls of various establishments across India. Unemployment rate in India too has declined sharply and as of financial year 2023-24, stands at 3.2% as against 6% in financial year 2017-18.
The proposed change will thus become one of the biggest digital reforms for the EPFO in the country and will bring ease of withdrawal of retirement savings for millions of salaried employees.