Special EPFO Scheme: Potential Incentive of Up to ₹15,000 for New Employees

Changes have been made to the rules of the Employees' Provident Fund Organisation (EPFO), which establish limits for withdrawing funds from pension savings (PF) to cover various needs, including housing expenses and special circumstances. These new guidelines clarify how often members can use their PF savings for different purposes.

EPFO has issued updated recommendations for advance withdrawals, dividing them into three categories: urgent needs, housing requirements, and special conditions. Separate restrictions on the number of transactions a member can make have been set for each category.

In the case of educational expenses, a member is entitled to withdraw funds up to 10 times during the term of their membership in EPFO. This provision applies to both the member and their family members.

Under the first category, which includes urgent needs, PF members can withdraw funds for themselves and their families to cover medical expenses and treatment without a set limit.

To cover wedding expenses, a member can make no more than five withdrawals during their membership period. This rule also applies to family members.

Construction or purchase of a house, as well as refinancing and renovation of residential property fall under the housing needs category. According to the guidelines, a member can withdraw funds for housing purposes no more than five times during their membership in EPFO. Furthermore, according to the third category, withdrawals from PF can occur no more than twice a year.

These provisions allow members to use their pension savings to meet important housing expenses while limiting the frequency of such withdrawals.

EPFO has reported that an employee can withdraw 75 percent of their pension savings amount 12 months after joining EPFO, and this amount can be received including interest. This measure is provided to employees for financial support so they can avoid any difficulties.

The government has increased the salary threshold for mandatory coverage by the Employees' Provident Fund Organisation (EPFO). Previously, this threshold was 15,000 rupees per month, but it has now been raised to 25,000 rupees. This change is expected to extend social security coverage to over 510,000 additional employees earning a monthly salary between 15,000 and 25,000 rupees.

However, it is important to understand that raising the limit does not guarantee automatic eligibility for benefits under the Employees' Pension Scheme (EPS) for every worker. EPFO published information on its X account (formerly Twitter), clarifying which employees may qualify for EPS membership under the new limit and which do not. The employee's current salary and their previous status in the pension scheme are decisive factors.

The Ministry of Labour and Employment has set the new limit at 25,000 rupees for mandatory coverage through EPFO. This change became effective on September 17, 2026. The goal of this modification is to expand the scope of social security for workers who were previously excluded from mandatory coverage due to the old limit.

Under the new system, employees can receive benefits related to the Employees' Provident Fund (EPF), the Employees' Pension Scheme (EPS), and the Employees' Deposit Linked Insurance Scheme (EDLI). EPF accumulates funds for retirement; EPS provides pensions to eligible members; and EDLI offers insurance benefits to families in case of an employee's death.

The EPFO publication specifically emphasizes that the new threshold amount cannot be equated with automatic entitlement to EPS participation. Even with a monthly salary of 25,000 rupees or less, membership in the pension scheme will depend on existing rules and the employee's prior status. For those falling under the new limit, membership and contributions to EPS may apply according to established norms.

Nevertheless, employees earning above 25,000 rupees who have never been EPS members will not automatically gain pension scheme membership under the new provision. Therefore, if your salary is in the range of 15,000 to 25,000 rupees, you cannot assume EPS eligibility solely based on salary size; you must also check whether you were previously an EPS member and what program conditions apply to you.

The new salary limit may also affect the contributions made by the employer (company) to EPS. At a rate of 8.33% for EPS, if the pension salary limit increases from 15,000 to 25,000 rupees, the maximum monthly contribution could increase from approximately 1,250 to 2,083 rupees. However, this does not mean that every employee earning up to 25,000 rupees will automatically contribute 2,083 rupees monthly; the actual contribution amount depends on the employee meeting the requirements, the pension salary, and applicable rules.

After the introduction of the new limit, it is important to distinguish between these three schemes. EPF: Future savings are built up through contributions from the employee and the employer. According to the rules, the employee can use these funds upon retirement or in other stipulated circumstances.

EPS: Eligible members receive a pension according to the scheme's rules. Membership and pension entitlement are determined by separate conditions.

EDLI: This is an insurance scheme linked to eligible employees. In the event of a member's death, their family or nominee may receive a benefit according to the scheme's rules.

Thus, being covered by EPF and having the right to a pension under EPS are two different matters. The type of benefit an employee receives is determined by the rules of the respective program.

If you believe that your contribution to EPF or EPS should be made according to the new rules after the new limit comes into effect, but this is not happening, you should first contact your company's HR department or your employer. If the issue is not resolved at this level, you can file a complaint through the EPFO EPFiGMS dispute resolution portal. When filing a complaint, it is recommended to have payslips, UAN, and other relevant employment documents ready to facilitate verification and understanding of the situation.