The Modi government is facing intense backlash from the Opposition following recent changes to the Employees’ Provident Fund Organisation (EPFO) rules. Critics contend that these ‘draconian’ amendments unfairly penalize salaried individuals, arguing that they are a direct consequence of the government’s alleged economic mismanagement. Opposition leaders have called on Labour and Employment Minister Mansukh Mandaviya to immediately reverse these new provisions.
A primary point of contention revolves around the extended waiting periods for accessing funds. Under the revised rules, the premature final settlement of EPF will now be available after a minimum of 12 months of unemployment, a significant increase from the previous 2-month period. Similarly, final pension withdrawals, previously accessible after just two months, will now require 36 months of unemployment.
Adding to the controversy is a new stipulation that mandates a minimum balance of 25% of a member’s contributions must always be maintained in their account, effectively locking away a portion of their savings indefinitely.
Taking to X (formerly Twitter), Congress MP Manickam Tagore denounced the Modi government’s new EPFO regulations as an act of ‘cruelty.’ Tagore asserted that ‘pensioners and job-losers are being punished for needing their own savings,’ directly appealing to Prime Minister Narendra Modi to intervene and prevent Minister Mansukh Mandaviya from ‘destroying people’s lives.’
He outlined the perceived harshness of the new policy: ‘Under the new EPFO decisions: You can withdraw PF only after 12 months of unemployment (earlier 2 months). Pension can be withdrawn only after 36 months (earlier 2 months). 25% of your own EPF will be locked forever!’ He labeled this, ‘not reform, this is robbery.’ Tagore further alleged that Mandaviya’s decisions would devastate the lives of pensioners relying on EPF for their survival. He implored, ‘Prime Minister, please intervene immediately. Don’t let bureaucratic cruelty destroy the dignity of India’s working class.’
Echoing these sentiments, TMC MP Saket Gokhale characterized the Modi government’s new EPFO rules as ‘shocking and ridiculous.’ Gokhale didn’t mince words, calling it ‘open theft of salaried people’s own money.’ He detailed the changes: ‘Earlier, on losing your job, you could withdraw your EPF balance after 2 months of unemployment. That minimum period has now shockingly been increased to 1 year. Basically, for withdrawing your own money, you need to now be unemployed for a full year as opposed to only 2 months.’
He continued to highlight the restrictive aspects: ‘You can withdraw the pension component of your EPF ONLY after 36 months (i.e. 3 years) of unemployment. Earlier, you could do it after two months. And this is the worst part: Of your EPF balance, 25% cannot be withdrawn and will remain locked for your entire career until you retire,’ he explained.
Gokhale questioned the practical implications, asking how an individual who loses their job can manage essential expenses like bills and EMIs when the government restricts access to their own savings for a full year. He pointed out that even after a year, only 75% of their savings would be accessible, and only if they remain unemployed. Furthermore, he claimed that making EPF mandatory means salaried individuals cannot avoid this ‘draconian monthly robbery’ of their own income by the government. He starkly asked, ‘How is a normal middle-class person expected to survive like this?’
The TMC MP concluded by asserting that these new rules are a clear indication of the Modi government anticipating a ‘drastic rise in unemployment due to its terrible economic policies.’ He viewed the locking of EPF funds as ‘signs of a panicked government trying to prevent a run on the EPFO,’ ultimately stating, ‘Salaried people are being punished for the Modi government’s mishandling of the economy.’ Gokhale vehemently urged Minister Mandaviya to immediately scrap these ‘draconian’ EPF rules.
Congress spokesperson Shama Mohamed also joined the chorus, demanding an immediate rollback of the controversial rules. She stated that the ‘new EPFO rules introduced by the Narendra Modi government in the name of ‘simplification’ are nothing short of looting the hard-earned money of the salaried middle class.’ Mohamed reiterated the key changes: ‘25% of the contributor’s amount cannot be withdrawn and will remain locked until retirement. The period for availing premature final EPF pension withdrawal has been increased to 36 months, up from 2 months earlier.’ She emphasized, ‘For any partial withdrawal, the waiting period has been extended to 1 year, instead of 2 months earlier.’ Her message on X concluded with a strong call: ‘The Modi government should immediately roll back these rules!’
It has been officially announced that unemployed members of the EPFO will now be able to access the final settlement or full withdrawal of their provident fund after 12 months of unemployment and their pension accounts after 36 months of unemployment. These significant amendments to the scheme were approved by the Central Board of Trustees, the EPFO’s apex decision-making body, which is chaired by Minister Mandaviya. The decision was made during a meeting held on Monday, October 13.
According to a senior official, the rationale behind these changes is to enhance social security benefits for formal sector workers. The official stated that many workers typically exit the EPFO’s coverage after just two months of unemployment, potentially losing out on long-term benefits. The official elaborated that if unemployed individuals do not re-enroll with the EPFO upon securing new employment, they risk forfeiting pension and other vital benefits, as an account only becomes eligible for pension after a cumulative service period of 10 years or more.