The Employees Provident Fund Organisation (EPFO) has rolled out crucial updates designed to enhance the financial experience of Employees Provident Fund (EPF) members. These updates, approved during the Central Board of Trustees (CBT) meeting on November 30, 2024, aim to address delays in claim settlements and streamline the overall process, resulting in faster service and greater financial relief for members.
Key Update on Interest Payments
A major revision is related to the calculation of interest on EPF claims. Historically, interest was only paid up to the end of the preceding month for claims settled by the 24th. However, under the newly amended rule for paragraph 60(2)(b) of the EPF Scheme, 1952, interest will now be calculated until the actual date of claim settlement. This change ensures that members will not lose out on interest during the processing of their claims, making the system more beneficial and equitable.
Previously, if claims were not settled by the 24th of the month, interest-bearing claims were delayed from the 25th to the end of the month. This was done to avoid any loss of interest for members. With the new rule, however, interest will be calculated continuously, meaning claims will be processed throughout the month, which will reduce pendency, expedite settlement, and ensure the more effective use of resources at EPFO.
Benefits for EPF Members
According to Puneet Gupta, Tax Partner at EY India, these updates bring several advantages to EPF members:
- Higher Returns: With interest now calculated up to the settlement date, members will earn better returns on their contributions.
- Faster Claim Processing: The continuous processing of claims will help ensure quicker access to the funds members are entitled to.
- Fewer Grievances: The revision will eliminate the gaps that previously led to disputes regarding interest calculations, thereby reducing member complaints.
- Efficient Resource Management: Improved processing and faster settlements will lead to better utilization of EPFO’s resources, enhancing overall efficiency and service quality.
Applicability and Implementation
The amendment to interest calculations applies specifically to claims made under Para 69 and Para 70 of the EPF Scheme, which are as follows:
- Para 70: Payment of EPF balance to the nominee or legal heirs in the event of the member's death.
- Para 69: Full EPF withdrawal in cases of retirement (at age 55 or older), disability, employment abroad, or following two months of unemployment.
Puneet Gupta of EY clarified that the new rule will impact only these specific claim settlements. Once the government issues an official notification, these changes will take effect. Until that time, the current rules for interest payments will remain in force.
This reform signals EPFO's ongoing commitment to delivering transparent, efficient, and member-focused services. By streamlining claim processing and ensuring more timely settlements, EPFO is striving to improve the financial well-being of its members, making it easier for them to access their hard-earned funds when needed most. The move also aligns with the broader goal of enhancing the user experience and reducing the likelihood of grievances among EPF members.
