EPFO auto claim settlement limit increased to Rs 1 lakh

In a significant move to enhance the financial well-being of its members, the Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) has approved a series of reforms, focusing on improved returns, simplified services, and better financial security. The announcements, made by the Ministry of Labour on Saturday, include new policies for ETF investments, changes to the EPF Scheme, and upgraded subscriber benefits.  

Under the newly approved exchange-traded fund (ETF) redemption policy, 50% of redemption proceeds will be reinvested in Central Public Sector Enterprises (CPSEs) and Bharat 22 funds, while the remaining funds will diversify into government securities and corporate bonds. This policy introduces a five-year minimum holding period for investments to ensure stability and higher returns for EPFO subscribers.  

To further broaden investment opportunities, guidelines have been established for investing in SEBI-regulated infrastructure investment trusts (InvITs) and real estate investment trusts (REITs), offering additional secure avenues for financial growth.  

Significant amendments have also been made to the EPF Scheme, 1952, including an update to the interest payment provision. Interest will now accrue until the actual settlement date of claims, addressing member grievances and ensuring accurate returns.  

The EPFO Amnesty Scheme 2024, another key development, encourages employers to voluntarily address past compliance issues without penalties. Linked to the Union Budget's employment incentives, this initiative aims to bolster job creation and formalize employment, especially benefiting MSMEs.  

The board has also extended the Employees’ Deposit Linked Insurance (EDLI) benefits, retroactively effective from April 28, 2024. The insurance coverage for dependents of deceased members now ranges from ₹2.5 lakh to ₹7 lakh, backed by an actuarial surplus of ₹6,385.74 crore.  

Subscriber services have been streamlined, with the auto claim settlement limit doubled to ₹1 lakh for advances related to housing, marriage, and education. Additionally, criteria for empaneling banks for centralized EPF contributions have been eased, lowering the collection share requirement from 0.5% to 0.2%.  

Modernization efforts also include the Centralized Pension Payment System (CPPS), set for full rollout by January 1, 2025. The system will enable seamless pension disbursements for over 7.8 million pensioners across India, eliminating the need for physical verification and allowing access through any bank or branch.  

In FY24, EPFO settled a record 44.5 million claims amounting to ₹1.82 lakh crore. This year, over 38.3 million claims have been processed, disbursing ₹1.57 lakh crore so far, underscoring EPFO’s commitment to efficient claim management.  

These comprehensive reforms aim to enhance financial inclusion and welfare for millions of workers, aligning with the government’s broader vision of a secure and prosperous workforce.