New EPFO Update: Pension Payout Now Allowed Even for Short-Service Employees (Less Than 6 Months of Service)

Pension Payout Now Allowed Even for Short-Service Employees

Until recently, thousands of employees who left their jobs within just a few months of joining (say, after 2–3 months) lost out on the pension share of their EPF contribution.
This was because the Employees’ Pension Scheme (EPS) required a minimum service period of 6 months to be eligible for pension withdrawal.
Anything short of that was treated as “zero completed years” — and the entire EPS amount used to get forfeited back to the fund.

That has now officially changed.

What Has Changed?

In April–May 2024, EPFO issued two internal circulars clarifying that members who exit before completing 6 months of service will still be eligible for pension withdrawal, provided at least 1 month of contributory service is completed.

In simple words:

SituationEarlierNow
Exit before 6 monthsPension share lapsed / forfeitedPension share payable to member

This is applicable even in cases of voluntary exit / resignation, as long as EPS contribution was made for at least one month.

👉 The move is aimed at avoiding an “injustice” to short-tenure employees who voluntarily resigned or were laid off before completing 6 months.

Why Was the Old Rule a Problem?

Under the old EPS rules, pension withdrawal was calculated on the basis of “completed years of service”:

  • Less than 6 months in a year = counted as 0
  • More than 6 months = counted as 1 full year

So even if someone had 5 months of service, it was treated as “0 completed years” — and no pension benefit was payable.

The employee share and employer share of PF could be withdrawn normally —
but the pension share simply lapsed.

✅ How the New Rule Helps – Example

Let’s say an employee joined a company in January 2024 and resigned in April 2024, completing 4 months of service.

ComponentOld SystemNew System
Employee PF shareWithdrawableWithdrawable
Employer PF shareWithdrawableWithdrawable
EPS (Pension) shareNot payable (forfeited)Payable

Now, the employee can receive the EPS amount along with the PF withdrawal, instead of losing it entirely.

Who Will Benefit the Most?

  • Employees who quit within 2–5 months of joining
  • Employees whose training period was counted as contributory service
  • Workers who had to resign early due to medical or personal reasons
  • Employees in high-churn industries (retail, BPO, logistics, contract staffing)
  • Anyone who did not complete 6 months but had at least one EPS contribution

What Should You Do?

  • If you left your job within 6 months, and have not yet applied for PF withdrawal →
    Check your EPS passbook balance before filing the claim.
  • If your PF claim was processed recently and the pension share was not paid, you can raise a grievance with EPFO citing the April/May 2024 EPS clarification and request re-settlement of the EPS amount.
  • Employers/HR teams should note this change and ensure correct guidance is given to short-service existing employees.

💡 Tip: When submitting Form-19 (PF withdrawal) + Form-10C (EPS withdrawal), make sure to keep a screenshot / PDF copy of your passbook showing the EPS contribution — this can serve as supporting evidence in case the pension share gets missed out.

Final Thoughts

This is a small but meaningful reform — especially for younger employees who frequently switch jobs or exit early.
By recognising short-tenure contributions and avoiding unnecessary forfeiture, EPFO has taken a step towards a more fair and transparent pension system.

At FinRight, we regularly help individuals get their full eligible PF and pension benefits, especially in complex or rejected cases.
If you’re unsure whether your EPS share has been paid or forfeited, feel free to reach out — we can review your PF passbook and advise you on the exact next steps.

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