WHY EPFO'S NEW WITHDRAWAL TIMELINES COULD CREATE MORE PAIN THAN PURPOSE

For millions of salaried Indians, tapping EPF savings just got harder. The EPFO has extended the wait for full withdrawals, raising concern that a move to promote long-term savings may instead add red tape. At its 238th meeting, the board eased partial withdrawals but stretched full withdrawal timelines—from two months to 12 months for EPF and up to 36 months for the pension scheme. With average balances below %2 lakh, the change is meant to deter early exits. But a reform meant to build discipline may end up testing patience.

- KUNAL KABRA

Giving birth to newer problems

The core verification trap: Currently, only full withdrawals trigger a detailed validation of an account—merging past employment records, fixing KYC (know your customer) mismatches, and verifying contribution histories. By contrast, partial withdrawals bypass these checks, creating a trap where members discover discrepancies only when attempting a full withdrawal. Resolving such issues requires the ex-employer’s coopera-

tion—already difficult after two months, and nearly impossible after 12 months when HR staff may have changed or companies become unresponsive.

Further, EPS eligibility issues—such as incorrect salary caps or missing pension contributions—remain hidden during partial withdrawals. We've seen too many cases where members were eligible for EPS, but employers didn’t deduct the contribution—or did so incorrectly. It creates a mess at the time of withdrawal.

International relocation crisis: Indians relocating abroad will face particular hardship. Many prefer closing EPF accounts before departure to avoid cross-border paperwork. The 12-month rule now forces them to either delay their move or leave funds behind, knowing that fixing issues from overseas is far more complicated.