The government has launched a new Employees Provident Fund (EPF) scheme across the country this week. The Central Government has made this announcement under the implementation of ‘Social Security Code 2020’, which will replace the old EPF scheme of 1952. Its objective is to simplify the rules of PF and provide digital facilities to its eight crore subscribers, which will increase transparency, reduce paperwork and simplify work processes. Overall, the aim is to improve financial flexibility for users, so they can make better use of their funds before or after leaving their job.
What has changed for users?
Under the new rules, the PF contribution for salaries up to ₹15,000 will be 12% of the basic salary – capped at ₹1,800 per month. However, if your salary is more than this amount, then the decision to deduct more PF entirely depends on you. For example, if your monthly salary is ₹1 lakh, the company will not be able to deduct more than ₹1,800 from PF without your consent.
The rules for partial withdrawal have also been simplified in the new scheme. The earlier 13 categories for partial withdrawal from PF have now been combined into three categories: 1- Essential needs (children’s education, marriage and treatment), 2- Household needs and 3- Special circumstances.
Under the new rules, if an employee leaves the job, the condition of minimum period of membership to withdraw the entire PF amount will no longer be applicable. Additionally, if EPFO delays the settlement without any cogent reason, the member will be entitled to receive interest at the rate of 12%.
Under the new scheme, members will have to provide details of their Aadhaar, PAN and bank account linked to Aadhaar to facilitate digital processing of claims and other services. The objective of this initiative is to facilitate online claims for partial withdrawal and other related services. Within 15 days of the implementation of the new scheme, companies or employers will have to update information related to Aadhaar, PAN, UAN and total salary of employees in Form-5.
Under the new rules, it has been made mandatory to maintain at least 25% balance in the EPF account for partial withdrawal. This means that one can withdraw 50% to 75% of the total deposited amount.
Has anything changed?
There is no change in mandatory EPF contribution. Mandatory PF contribution from both employee and employer will continue to be 12% of basic salary as before, while the existing rate of 10% will continue to be applicable for certain notified institutions.
Under the new scheme, membership of existing EPF subscribers will continue without any interruption; They will automatically be made members under the EPF Scheme, 2026, without the need to open a new account.
There will be no change in the benefits under the ‘Employees Deposit Linked Insurance’ (EDLI) scheme under the new scheme. On the death of the account holder, the nominee and legal heirs are guaranteed to receive an insurance payout ranging from a minimum of ₹50,000 to a maximum of ₹7 lakh.
Existing members of the Employees’ Pension Scheme 1995 (EPS 95) will automatically become members of EPS 2026, and will continue to receive their already sanctioned pension without any interruption.