The Employees’ Provident Fund Organisation ( EPFO ) has introduced important amendments to its interest payment system, which could significantly affect members’ finances. In a major development during the 236th meeting of the Central Board of Trustees (CBT) on November 30, 2024, chaired by Union Minister Mansukh Mandaviya, new rules for calculating and disbursing interest on Employees’ Provident Fund (EPF) balances were approved. These changes aim to streamline the settlement process and provide members with more interest on their savings.
Let’s take a closer look at what’s changing, why it matters, and how it could benefit EPF account holders.
The Amended Rule: Interest Payment Aligned with Settlement Date: One of the key amendments to the EPF scheme is the modification of the interest payment date. Under the new rule, EPF interest will now be paid up to the settlement date. This change represents a departure from the earlier system, where interest was calculated only up to the end of the previous month if a withdrawal request was made before the 24th of the month. This led to a situation where members lost out on interest for the days after the last day of the previous month until their claim was processed.
Old System vs. New System Previously, if a claim was filed before the 24th of the month, interest was paid only until the previous month’s end, leaving members with less interest. This resulted in a minor loss for those who requested withdrawals just after the 24th of the month.
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Under the new system, the interest will be calculated and paid until the actual settlement date, meaning that if there are delays or claims are settled beyond the 24th, members will not lose out on potential interest. This amendment ensures that members will earn the full interest due to them until the day their claim is settled, rather than losing out on those final days of the month.
Continuous Claim Processing and Streamlined Settlements: In addition to the change in the interest payment rules, the CBT’s decision also involves an overhaul of the claims processing system. Under the previous system, claims could only be processed in monthly batches, with a cut-off on the 24th of each month. Claims made after the 24th had to wait until the start of the next month, causing potential delays.
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The new system will eliminate this batch-based processing. Claims will be processed continuously throughout the month, preventing any delays in settlement. This will help members receive their EPF settlements promptly, with the added benefit of accruing interest up until the settlement date.
Impact on EPF Members: More Interest, Faster Settlements
The revised rules will benefit EPF account holders in multiple ways
Increased Interest: With the interest now calculated up to the settlement date, members will receive a higher interest amount, especially if there are any delays in processing their claims.
Timely Settlements: Continuous claim processing will mean that settlements can be completed without unnecessary delays, leading to faster access to funds for those who need them.
More Flexibility: Members who request withdrawals after the 24th of the month will no longer suffer from interest loss, making the system more member-friendly.
This move reflects EPFO’s commitment to improving its services and enhancing the financial security of its members.
Other Key Changes Approved by the CBT
In addition to the new interest payment system, several other significant changes were approved by the CBT that could positively impact EPF members:
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1. Retrospective Extension of EDLI Scheme: The Employees’ Deposit-Linked Insurance (EDLI) scheme has been extended retroactively to beneficiaries from April 28, 2024. The scheme provides life insurance coverage of up to Rs 7 lakh to the dependents of EPF members in the unfortunate event of their death. This extension ensures more comprehensive support to members’ families, offering them a financial safety net.
2. Empanelment of Additional Banks for EPF Contributions: The CBT has approved the inclusion of additional banks for collecting EPF contributions. These banks, which were not previously eligible, will now be allowed to participate in EPF collection as long as they meet a minimum collection threshold of 0.2% of the total EPFO collections. This change broadens the reach of EPF services, making it more accessible to members.
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3. Increase in Auto Settlement Claim Limit: Another major change is the increase in the auto-settlement claim limit from Rs 50,000 to Rs 1 lakh. This limit applies not only to medical claims but also to claims for housing, marriage, and education. The higher limit will make it easier for members to access funds for essential life events without waiting for approval or processing delays.
What This Means for EPF Account Holders: These changes will bring about a more efficient and beneficial system for EPF members. With continuous processing, higher interest payments, and faster access to funds, the revisions offer significant advantages over the previous system. Additionally, the expansion of benefits through the EDLI scheme and the increase in auto settlement claims further improve the value of the EPF scheme for members.
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The revision of the EPF interest payment rule, alongside other changes to the EPF scheme, marks a positive shift in how the retirement body manages member funds. The key benefits — more interest, quicker settlements, and easier access to funds — are all steps towards enhancing the financial security and ease of EPF account holders.
By offering timely settlements and ensuring that interest is calculated fairly, the EPFO is providing better service to its millions of members. As these changes come into effect, EPF account holders can look forward to more efficient processes and greater financial protection in the future.
