The Employees’ Provident Fund Organisation (EPFO) will be bringing in some significant revisions to its guidelines and policies for its numerous members, with most changes expected to take effect in the upcoming year. The EPFO will be introducing several new services for its subscribers. The main aim of these updates is to enhance convenience for PF account holders and assist them in effectively overseeing their retirement savings. These modifications will provide advantages to both private sector and government employees.
Here are the new EPFO rules:
Change in the employee's contribution limit
A significant update involves the elimination of the EPF contribution limit for employees. Currently, employees allocate 12% of their basic salary towards their EPF account each month. However, there is a proposal to enable employees to contribute based on their actual salary instead of the EPFO-fixed amount of Rs 15,000. Upon the implementation of this policy, employees will have the opportunity to amass a larger retirement fund, resulting in a higher monthly pension payout.
PF money withdrawal from ATM
EPFO has said very soon its members will be able to withdraw their provident fund money with an ATM card. This will allow subscribers to withdraw funds anytime, anywhere, enhancing convenience. The ATM withdrawal facility is set to be launched in the Financial Year 2025-26.
Sumita Dawra, Secretary of the Labour Ministry, stated that the Ministry is enhancing its IT systems to offer improved services to Indian workers. This development will allow EPFO members to access their provident funds at ATMs effortlessly.
The updated guidelines aim to streamline the fund withdrawal process for members, providing them with a faster and more efficient experience. This new service will also eliminate the need for members to wait 7 to 10 days to receive their PF money in their bank accounts, saving valuable time.
EPFO IT system upgrade
EPFO is in the process of enhancing its IT infrastructure, which will streamline the process for PF claimants and beneficiaries to withdraw their deposits with minimal manual intervention. This upgrade is projected to be finalized by June 2025.
Upon the completion of the IT infrastructure upgrade, members can expect expedited claim settlements, enhanced transparency, and a decrease in fraudulent activities.
Introduction of Equity Investment Option
EPFO is contemplating the possibility of allowing its members to invest in equities beyond the realm of Exchange-Traded Funds (ETFs). This proposed change will empower PF account holders to better manage their funds, potentially yielding higher returns and enabling portfolio diversification. If approved, direct equity investment will offer a new avenue for members to optimize their investment strategies and financial growth.
Pension withdrawal from banks
The EPFO is implementing substantial modifications for pensioners. According to the recent regulation, pensioners will have the ability to withdraw their pension from any bank throughout the country, eliminating the need for extra verification. This initiative is aimed at enhancing convenience for members regarding pension withdrawals and will result in time savings, as they will have the flexibility to withdraw their pension from any bank of their choice.
Job creation and EPFO data
According to recent government data, net formal job creation through the Employees’ Provident Fund Organisation (EPFO) reached a five-month low of 1.34 million in October 2024, reflecting an 11.8% decrease compared to the 1.52 million seen in October 2023.
The Ministry of Labour and Employment released provisional EPFO payroll data on Wednesday, revealing a month-on-month decline of 28.7% with 1.88 million new subscribers in September 2024. This is surprising given that October is typically a month of increased hiring activity.
In previous months of 2024, net new subscribers added to the EPFO were 1.28 million in April, 1.35 million in May, 1.39 million in June, 1.61 million in July, and 1.58 million in August.
The data shows that approximately 0.75 million new members joined the EPFO in October 2024, which is a 2.59% decrease from the same month in 2023. Factors contributing to this increase include a rise in employment opportunities, greater awareness of employee benefits, and successful outreach programs by the EPFO, according to the ministry.
The latest payroll data reveals that around 1.29 million members left and later rejoined EPFO, showing a year-on-year growth of 16.2% compared to 1.11 million in October 2023.
These individuals changed jobs and returned to establishments covered by EPFO, choosing to transfer their savings instead of opting for final settlement, thus ensuring their long-term financial security and expanding their social security coverage.
In October, a total of 0.27 million net female members were included in EPFO, with 0.21 million new female members joining during the month.
The rise in female member additions signals a trend towards a more diverse and inclusive workforce, as stated by the ministry.
The states of Maharashtra, Karnataka, Tamil Nadu, Delhi, Haryana, Telangana, and Gujarat collectively added 0.82 million net members in October 2024, accounting for 61.3% of the total net member additions. Maharashtra alone contributed 22.1% of the total net members.
