EPFO 3.0 coming soon? Flexible savings, ATM PF withdrawals in the pipeline
New Delhi, Nov 29, 2024
In its updated version, the EPFO will allow employees to contribute amounts exceeding the prescribed limit at any time, offering greater financial flexibility to subscribers
Just days after the introduction of PAN 2.0, the central government is now reportedly preparing to launch the EPFO 3.0 plan, which is expected to include several subscriber-friendly features. According to a report by CNBC Awaaz, the Employees’ Provident Fund Organisation (EPFO) may remove the 12 per cent cap on employee contributions to the Provident Fund (PF).
In its updated version, EPFO aims to implement measures prioritising employee benefits based on personal savings goals. Employees might soon have the flexibility to contribute amounts exceeding the prescribed limit at any time, providing greater financial flexibility for subscribers, reported ET Now. However, employer contributions will remain fixed, calculated based on the employee’s salary, ensuring no additional financial burden for employers.
ATM-based PF withdrawals by mid-2025?
The initiative includes plans to enable subscribers to withdraw PF amounts directly via ATMs, simplifying the withdrawal process. The Labour Ministry is also reportedly working on issuing cards to facilitate PF withdrawals through ATMs. This facility is projected to be operational by May-June 2025, further improving convenience for EPFO subscribers.
The government’s overarching goal with EPFO 3.0 is to empower employees with more autonomy over their savings. Additional contributions may also be converted into higher pensions, enhancing long-term benefits, the report said.
EPS-95 overhaul also on the cards?
In a related development, the central government is reportedly considering a revision of the Employees’ Pension Scheme 1995 (EPS-95). A PTI report on November 28 mentioned that the Labour Ministry is exploring options to allow employees to contribute directly to EPS-95.
Currently, the entire 12 per cent employee contribution goes into the EPF account, while the employer’s contribution is split between EPS-95 (8.33 per cent) and EPF (3.67 per cent). Under the proposed changes, employees could increase their pension benefits by directly contributing to EPS-95.
Additionally, the government is planning to raise the wage ceiling for EPF contributions. This would mark the first increase in a decade, following the 2014 revision, which raised the cap from Rs 6,500 to Rs 15,000. According to a report by The Economic Times earlier this month, the new limit might increase by Rs 7,000 to Rs 21,000, ensuring better retirement benefits for employees.
[The Business Standard]
