The Employees' Provident Fund remains one of the key social security schemes for salaried individuals in India. Managed by Employees' Provident Fund Organisation (EPFO), it provides financial support after retirement.
In the EPF scheme, employees need to contribute a portion of their basic pay every month, also matched by their employer. Together, this contribution continues to earn interest over time, generating a substantial corpus for the employee.
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As part of the new EPFO 3.0 reforms, the organisation has also made it easier to access PF funds before retirement, while focussing on digitisation and less paperwork. Due to these reforms, employees are expected to benefit from faster claim settlements, improved online services, easier account management and quicker access to their provident fund savings.
Additionally, many employees may not be aware but their EPF subscription also comes with a hidden safety feature. As per EPFO rules, eligible EPF subscribers can receive an insurance cover of up to Rs 7 lakh under the Employees' Deposit Linked Insurance (EDLI) scheme. The benefit is provided without any extra contribution from employees.
Who Can Avail This Insurance?
As per EPFO, the insurance is automatically activated for all EPF subscribers. In case an employee passes away while being in service, their nominees are eligible to claim this compensation.
“In case of death during service, the nominee receives a minimum of Rs 2.5 lakh and up to Rs 7 lakh, based on the employee's salary and EPF balance…,” the EPFO website states.
Under the EDLI scheme, employers contribute 0.5% of employees' wages towards the insurance fund, while employees do not pay anything. Claims are generally designed to be processed within 20 days so that family members can have quick access to funds.
How Is Benefit Calculated
The insurance benefit is calculated based on the employee's EPF contributions and salary history. The payout is either linked to the average PF balance maintained during the last 12 months, subject to conditions, according to the EPFO website.
Alternatively, it is calculated as 35 times the average monthly wages (up to Rs 15,000) plus 50% of the average PF balance. This balance is capped at Rs 1.75 lakh.
Minimum benefit: Rs 2.5 lakh.
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Maximum benefit: Rs 7 lakh (including 20% enhancement).
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