In a significant push towards digital compliance, the government has rolled out a comprehensive reform of the Employees' Provident Fund Organisation (EPFO). The new framework seeks to simplify retirement-related services, reduce processing times and improve transparency for millions of EPFO members.
The Ministry of Labour and Employment has brought into effect three new social security schemes covering provident fund, pension and deposit-linked insurance benefits under the Code on Social Security, 2020. These schemes will take the place of the legacy EPF, family pension, pension and insurance schemes that have governed employee benefits for several decades.
EPFO Claims To Be Cleared Within 20 Days
The revised rules require the EPFO to process provident fund withdrawal, pension and deposit-linked insurance claims within 20 days. This timeline applies only where the claimant has furnished all the required details.
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Officials could face financial consequences for unnecessary delays. If the Commissioner fails to meet the deadline without reasonable grounds, interest at the rate of 12% per annum may become payable on the pending benefit. The notification says this sum can be recovered from the Commissioner's salary.
According to a senior Labour Ministry official quoted by PTI, penal interest for delayed settlements is not a new concept and was available under the previous schemes. However, the latest rules replace the variable rate linked to EPF returns with a flat 12% annual penalty.
Digital-First Approach Takes Centre Stage
Strengthening digital compliance is among the principal goals of the newly notified rules, according to the official. The measures are intended to encourage both employers and the EPFO to rely more heavily on online processes, reducing delays for members.
The notification further requires exempted establishments and EPF trusts to provide online mechanisms for submitting claims and applications through online platforms, widening the reach of digital services under the social security system.
Contributions Stay The Same Under Revised Framework
While the government has overhauled the EPFO framework, contribution rates will remain unchanged, the official said.
The compulsory EPF contribution remains 12% of Rs 15,000, which works out to Rs 1,800 a month. Employers will continue to make a matching contribution as required under the law. However, any amount above the mandatory Rs 1,800 will now be treated as a voluntary contribution.
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