In a significant revamp of the Employees’ Provident Fund (EPF) scheme, the Employees’ Provident Fund Organisation (EPFO) is reportedly considering introducing some major changes.  

According to media reports, the Labour Ministry, which oversees the EPFO, may remove the existing 12 per cent cap on employees’ contributions to the EPF. At present, employees contribute 12 per cent of their salary (basic pay and dearness allowance) to EPF, with an equal contribution from the employers. While the employee’s entire contribution goes to the provident fund, the employer’s contribution is proportioned, with 8.33 per cent allocated to the Employee Pension Scheme (EPS) and the remaining 3.67 percent directed to the EPF account. 

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The major changes under consideration are as follows. 

Higher EPF Contribution: Under the existing regulations, employees cannot contribute more than 12 per cent of their salary to EPF. The proposed removal of this ceiling in EPFO 3.0 initiative aims to offer greater flexibility and benefits to EPF subscribers. Notably, any higher contribution by an employee would not be matched by the employer. The contribution by an employer will remain fixed based on the employee’s salary. 

Converting Provident Fund To Pension: Another notable point under consideration is converting the employee contributions into pensions at the employees’ discretion. So, instead of getting their provident fund savings as a lump sum after retirement, employees can have higher pensions. In short, a higher contribution to PF and conversion of PF to pension would mean a higher amount of social security for a person upon retirement. 

Withdrawal Of PF Through ATMs: The government is also considering introducing a provident fund (PF) withdrawal facility through ATMs. Reportedly, the government plans to issue a card to EPF subscribers which they can use at ATMs to withdraw their PF amount. The card will be like a debit card, but for withdrawing the PF amount. The withdrawal amount, however, will be restricted to 50 per cent of the total deposit.  EPF Claim Settlement Improves With Lower Claim Rejections: EPFO

The government may announce this initiative in March or April of 2025, according to the reports. 

EPF provides social security to employees in the organised sector in India. EPF is a mandatory scheme offered by organisations employing 20 or more employees. At present, the wage ceiling is Rs 15,000, which is also under consideration to be raised to Rs 21,000 to provide enhanced social security to employees. Way back in 2014, this limit was revised from Rs 6,500 to Rs 15,000.