EMPLOYMENT UPDATE
2 April, 2025
Issue No. 02/25-26
EPFO BOOSTS EASE OF LIVING: AUTO-SETTLEMENT LIMIT FOR PF WITHDRAWALS RAISED TO ₹5 LAKH
INRODUCTION
The Employees’ Provident Fund Organisation (“EPFO”) is introducing significant reforms to simplify and speed up provident fund withdrawals for its 7.5 crore members. One of the key changes is the increase in the auto-settlement limit for advance claims from ₹1 lakh to ₹5 lakh, a fivefold hike aimed at improving the “Ease of Living.”
The proposal was approved by Sumita Dawra, Secretary, Ministry of Labour and Employment, during the 113th Executive Committee meeting of the Central Board of Trustees (CBT) held in Srinagar on March 28, 2025. Once finalized by the CBT, members will be able to withdraw up to ₹5 lakh automatically without manual intervention.
EPFO first introduced the auto-settlement system during Covid period in April 2020 for medical emergencies and later expanded it to include withdrawals for education, marriage, and housing needs. In May 2024, the limit for auto settlement was increased from Rs.50,000 to Rs. 1 Lakh.
The system uses advanced IT-driven technology to process claims automatically within 3–4 days, provided KYC details, eligibility criteria, and bank validations are met. Claims that fail automatic validation go through secondary scrutiny for approval. This automated process has significantly improved efficiency, with 95% of claims now being settled within three days.
As of March 6, 2025, EPFO processed a record 2.16 crore auto-claims—a sharp rise from 89.52 lakh claims in the previous financial year—and reduced rejection rates from 50% to 30%.
REFORMS BY EPFO
To further streamline processes, EPFO has reduced withdrawal formalities from 27 steps to 18 and plans to cut them down to just six soon. Additionally, EPFO is set to integrate Unified Payments Interface (UPI) into its system by May or June 2025. This will allow members to receive their provident fund directly through apps like Paytm, Google Pay, and PhonePe, reducing settlement times from days to minutes while enhancing transparency and reducing rejections. The UPI feature may also extend to other government savings schemes like the General Provident Fund (GPF) and Public Provident Fund (PPF).
In another development under EPFO’s upcoming “EPFO 3.0” system, members will soon be able to withdraw funds directly from ATMs, making access to their savings as easy as using a bank account. This upgrade aligns with EPFO’s goal of offering banking-like convenience for retirees and active members alike.
CONCLUSION
EPFO’s commitment to modernization has also expanded automated claims to cover a variety of needs such as illness, education, housing repairs, and marriage expenses. These improvements are part of a broader effort to ensure faster access to funds while minimizing human intervention.
With these initiatives, EPFO continues to enhance its services by leveraging technology and simplifying processes, ensuring greater convenience and financial security for millions of employees across India.
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