Centre To Raise Auto-Settlement Limit For PF Withdrawals To Rs 5 Lakh: Report

The government is set to ease the Provident Fund (PF) withdrawal process by increasing the auto-settlement limit from Rs 1 lakh to Rs 5 lakh. This initiative aims to improve the “ease of living” for over 7.5 crore members of the Employees' Provident Fund Organisation (EPFO), according to a report by news agency ANI.

The reports said that Sumita Dawra, Secretary in the Ministry of Labour and Employment, had approved the proposal to increase the limit during a meeting in Srinagar. The recommendation will now be presented for approval to the Central Board of Trustees (CBT). Once sanctioned, EPFO members will be able to withdraw up to Rs 5 lakh through the auto-settlement system.

EPFO's auto-settlement mode for claim processing was introduced in April 2020 for medical emergencies. Since then, it has expanded to cover other essential needs, including education, marriage and housing. In May 2024, the limit for auto-approved claims was raised from Rs 50,000 to Rs 1 lakh.

EPFO’s auto-settlement system has seen significant growth, with a record 2.16 crore auto-claims processed as of Mar. 6, 2025, compared to 89.52 lakh claims in 2023-24. Additionally, 95% of auto-mode claims are now settled within just three days, a huge reduction from the earlier settlement period of 10 days. The rejection rate has also improved, falling from 50% in 2024 to 30%.

To further simplify the process, EPFO has reduced the number of validation formalities from 27 to 18 and is now working to bring this down to just six. This move will enable quicker claim approvals while ensuring members do not file ineligible claims, as per the report.

The EPFO has developed an automated claim-processing solution wherein claims are handled entirely by an IT system without human intervention. Claims that meet requirements — such as Know Your Customer (KYC) compliance, bank account validation and eligibility criteria — are automatically approved and processed for payment.

For cases that require further scrutiny, claims are not outright rejected. Instead, they are subjected to a second level of verification before a final decision is made. The EPFO is also working on centralising its member database to streamline operations further, reducing paperwork and delays in claim settlements.

In another development, the EPFO is set to introduce Unified Payments Interface (UPI) transactions for PF withdrawals. Once implemented, this feature will allow members to withdraw funds directly through UPI platforms and ATMs, eliminating the need for traditional banking channels. The new withdrawal system is expected to be launched by May or June 2025.

The introduction of UPI-based withdrawals could also pave the way for similar improvements in other savings schemes, including the General Provident Fund (GPF) for government employees and the Public Provident Fund (PPF) offered by banks.