Big decision of the government regarding pension!
Retirement planning often seems like a cumbersome task to common people, but the year 2025 has proved to be a game-changer for the Indian working class in this regard. Taking seriously the old grievances of the employees, policy makers have made fundamental reforms in the structure of the Employees' Provident Fund (EPF) and the National Pension System (NPS). Till now people had to struggle with paperwork and strict rules to withdraw their own money, but new reforms have made the system transparent, digital and more flexible.
The Pension Fund Regulatory and Development Authority (PFRDA) has made NPS attractive even for those who till now used to run away from it due to the fear of long lock-in period. The biggest relief is that the limit for purchasing mandatory annuity (pension plan) has been reduced from 40% to 20%. This simply means that at the time of retirement, you can now withdraw 80% of your total corpus in lump sum.
The rules have become even easier for small investors. If your NPS fund is Rs 8 lakh or less, you can withdraw 100% of the money without purchasing any annuity. Also, now the compulsion to wait for 60 years has also ended. You can exit even after staying in the system for 15 years, and those who want to continue investing after retirement can stay in it till the age of 85 years. The facility of partial withdrawal has also been increased if needed, now you can withdraw money four times before the age of 60.
Now non-government subscribers will be able to invest 100% of their NPS funds in equity (stock market), which was earlier limited to 75%. This is a golden opportunity for those youth who want to take a little risk to beat inflation.
However, 100% equity means that your fund will be directly affected by market fluctuations. Therefore, experts are of the opinion that instead of putting the entire capital at risk, use 'Multiple Scheme Framework' (MSF). Through this, you can create a balance between safe and aggressive investment by dividing your money into different parts.
For years, the complex processes of EPFO had been a headache for employees, but 'EPFO 3.0' has completely changed this experience. Earlier, to withdraw money from PF, 13 different reasons like marriage, education, buying a house or illness had to be given, and the rules were different for each reason. Now all these have been removed and condensed into just three categories: essential needs, housing and special circumstances.
The biggest relief is that now you do not need to provide any documentary proof or lengthy explanation to withdraw money under 'special circumstances'. If you are in financial crisis, you can withdraw up to 100% of your 'Eligible Balance', provided you maintain 25% of the amount in the account. Also, the minimum period of employment for withdrawing money has also been made uniform to 12 months.
After changing job, you will no longer need to appeal to your previous company or boss for PF transfer or withdrawal. If your UAN is linked to Aadhaar and KYC is complete, you can process your claim without employer intervention. Transfer Certificate (Annexure K) can now be downloaded directly from the portal.
EPFO has also taken full care of security and convenience. Now claims up to Rs 5 lakh will be settled digitally in a completely automated manner. With the introduction of face authentication facility on UMANG App, handling PF work from home has become even safer.
