How the EPFO is trying to get it right for its subscribers

For years, the Employees’ Provident Fund Organisation (EPFO) has been seen as a lethargic entity with labyrinthine processes, which often resulted in requests from its over 300 million members being rejected or delayed.

But over the past two years, it has made a concerted effort to iron out these wrinkles and help subscribers access their savings in time. In October, the Central Board of Trustees, chaired by Union Labour and Employment Minister Mansukh Mandaviya, simplified the partial withdrawal provisions by merging 13 categories into three broad headings—essential needs such as illness, education and marriage; housing; and special circumstances.

Now, the EPFO is working on automating transfers, which remain a sore point for subscribers, says Central Provident Fund Commissioner Ramesh Krishnamurthi. He adds that one of the key areas of focus will be those still holding PF accounts from before 2017 when Unique Account Numbers (UANs) and Aadhaar were not linked with each other. The EPFO is also consolidating its multiple databases under the Centralised IT Enabled System (CITES) plan, which will enable faster processing of claims.

“The focus of our reforms has been to do away with manual interventions, discretion, and unnecessary or redundant processes,” Krishnamurthi tells BT. He says measures like scrapping the need for uploading a cheque leaf or attested copy of the bank passbook for online claims and approval from employer for transferring a PF account have already led to faster claims processing.

About 30 million claims have been filed without the cheque leaves being approved and 3.5-4 million transfers have occurred without employer approval. Simplification of joint declaration has also led to a reduction in the number of grievances, he notes.

For the EPFO, these reforms have not only helped in better customer service but also reduced the workload of its officers and improved their efficiency and focus on areas such as timely settlement of claims.

Simplifying Transfers

Many complaints pertain to transfer requests from members employed before 2017 who have just a member ID but no UAN or haven’t linked their UAN to Aadhaar.

“They only come to us when they actually need the money. At that time, because our data is distinct and maintained in separate databases, there is a huge effort for the claimant to get the account transferred from one office to another. And they are able to withdraw funds only when they are accumulated in one office,” says Krishnamurthi.

The EPFO is looking to address this. “Just like we did for joint declarations, we are going to fully automate all transfers after 2017. If a member joined after 2017, we are going to suo moto transfer all the amount to the latest employment,” he says.

Simultaneously, the EPFO is working to consolidate its 123 databases into a single database under the CITES 2.01 project. Once this is done, it expects 60-70% of all transfers to be automatic.

“For the rest, we will come out with a large campaign to educate members about how to go about this process and make sure they do it well in advance, rather than waiting till when they need a housing loan or something,” says the CPFC.

In fact, the CITES 2.01 project is in the final stages of testing and is likely to be rolled out in a few months. The revamped Electronic Challan-cum-Return and user management modules have already been launched; three more modules for pension, claims processing and annual accounts are under testing.

Expanding Coverage

Changing the wage cap from the current Rs 15,000 a month and threshold to 20 workers per establishment for greater coverage under the EPFO is a policy decision, Krishnamurthi says, but the retirement fund manager is taking other measures to improve compliance.

On its Foundation Day on November 1, Mandaviya launched the Employees’ Enrolment Scheme 2025 that aims to encourage employers to voluntarily declare and enrol eligible employees. The scheme provides that employers will not be required to remit the employee’s share of contribution if not deducted earlier, and only a nominal penal charge of Rs 100 will apply along with interest on delayed PF contributions.

Simultaneously, the EPFO is identifying establishments that have filed their draft ECR, which is an online monthly return to pay PF contributions, but are not remitting them actually. Initially, it selected about 4,000 establishments and sent them an SMS that they have not completed the filing process.

On its employers’ portal, the EPFO will soon launch an option to enable employers to explain why they are not remitting PF dues in cases where the business has merged with another entity or there is no business taking place.

The EPFO has also signed a memorandum of understanding with the Government e-Marketplace (GeM) to ensure that outsourced workers in government offices through the portal are covered under social security. GeM and EPFO will work on system-level integration that will facilitate monthly verification of PF contributions by service providers.

PF Returns

When asked about PF returns, Krishnamurthi underscores the robustness of the EPFO corpus and says the retirement fund manager is working on an interest stabilisation reserve mechanism that will ensure a stable interest rate to members despite volatility in interest rates.

“Let me assure you, our corpus of Rs 28 lakh crore is extremely robust. We value all our holdings at cost even though the market value may be much higher. Second, most of our holdings are long term. We have been successful in locking interest rates for longer duration of time at slightly higher rates. Though there is a downturn now, in terms of interest rates coming down, our holdings are long term,” he says.

In FY25, the benchmark was 7.3% and both the EPFO’s portfolio managers earned returns of 7.32–7.34% on debt investments. The differential was made up through redemption of exchange-trade funds, he says.

The EPFO has managed to give over 8% returns on PF deposits since 2011-12 and has maintained a rate of 8.25% for FY25 and FY24.

Krishnamurthi signs off underlining the need for members to maintain their PF account, which will help compound returns and help them get a much bigger corpus at retirement. In fact, this is also one of the reasons the EPFO chose to ensure that members must have a 25% minimum balance in their accounts.

The EPFO is clearly trying to become more modern and in sync with expectations of subscribers. Much work is on at the EPFO and the months ahead will show the kind of impact it has.

@surabhi_prasad