GPF vs EPF: How provident fund advance withdrawal rules differ for government and private-sector employees
Both government and private-sector employees can build their retirement savings through provident fund accounts, but the contribution rules, governing bodies and withdrawal provisions under the two frameworks differ.
The general provident fund (GPF) is meant for government employees, who contribute to the scheme without any matching contribution from their employer. In contrast, the employees’ provident fund (EPF) covers those in the organised private sector, with both the employee and employer contributing to the fund.
Individuals are allowed to access their provident fund balance before retirement under specified circumstances. However, the terms and conditions for taking an advance can differ between the two schemes.
Who is eligible for GPF and EPF
The primary objective of both schemes is to provide a dependable source of income after retirement to employees of different sectors.
| Particulars | GPF | EPF |
|---|---|---|
| Who is covered | Government employees | Private-sector employees |
| Who contributes | Employee only | Both employee and employer |
| Interest rate | 7.1% | 8.25% |
| Administered by | Department of Pension & Pensioners’ Welfare | EPFO |
| Joining cut-off | Employees who joined before 1 January 2004 | No cut-off |
| Wage limit | No such wage ceiling | ₹25,000/month |
It must be noted that government employees joining after 2004 are not eligible for GPF because they are covered under the National Pension System (NPS). Hence, the withdrawal rules and other conditions only apply to those who are covered under the old pension scheme.
How does GPF advance withdrawal work?
GPF subscribers can take refundable advances from their accumulated balance for specified purposes such as education, medical emergency, marriage, buying a house or purchasing consumer durables.
The amount that can be withdrawn is generally capped at 12 months of pay or three-fourths of the GPF balance, whichever is lower. However, the sanctioning authority can allow withdrawing 90% of the balance under some special circumstances, according to a blog post by Paisabazaar.
The sanctioning authority is required to sanction and credit the eligible advance within 15 days of the request. Subscribers do not need to submit documentary proof to raise a claim for a GPF advance. The amount withdrawn has to be repaid, with the recovery spread over a maximum of 60 monthly instalments.
Unlike a loan, no interest is charged on a GPF advance. Subscribers can also take multiple advances during their service, including while an earlier advance is still being repaid. If a fresh advance is sanctioned before the previous one has been fully recovered, the outstanding amount is added to the new advance, and the instalments are recalculated based on the combined amount.
EPF advance withdrawal rules
Unlike GPF advances, EPF partial withdrawals do not have to be repaid, making them a permanent withdrawal from the member’s retirement corpus. An EPF member can also withdraw money for specified purposes such as marriage, medical treatment, and even during unemployment.
The amount an EPF member can withdraw depends on the purpose, which is not the case for GPF subscribers.
EPF members can withdraw up to 75% of their balance immediately after losing or leaving a salaried job. The remaining money becomes available only after completing 12 months of unemployment.
For education-related expenses for themselves or their family members, EPFO members are allowed to make advance withdrawals. This facility can be availed up to 10 times during the entire EPF membership.
Medical treatment falls under the essential-needs category, so there is no fixed limit on the number of times a member can seek an advance.
Salaried employees can also withdraw funds for marriage expenses of self or eligible family members. Such withdrawals are permitted up to five times during the EPFO membership period.
