Finshots Daily What’s up with the new EPFO rules?
Oct 23, 2025
Discover the latest changes in EPFO rules that redefine how workers save for retirement. The shift from 13 to 3 withdrawal options simplifies access, but new lock-in periods raise concerns for unemployed members needing cash. Explore the tug-of-war between worker ownership and government control, with younger job-hoppers benefiting while older workers may face challenges. Delve into how EPFO invests members' money and the impact of tax on returns, as well as whether these stricter rules build trust or breed distrust among contributors.
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EPFO Is A Massive Forced-Savings Engine
- EPFO auto-saves 12% of wages (matched by employers) to force retirement savings for many who otherwise won't save.
- The fund manages massive assets and offers an 8.25% return, acting as a compulsory long-term saver for 32 crore accounts.
Simplified Rules With A Mandatory Lock
- New rules merge 13 clauses into three broad categories and allow withdrawals after 12 months of service.
- Employees can now withdraw up to 100% of eligible balance but 25% must remain locked until retirement.
Policy As A Commitment Device
- Policymakers framed the lock as a commitment device to prevent early depletion of retirement savings.
- Data shows many members drain balances early, so the state wants to protect long-term pensions as population ages.