EPFO Board clears major reforms to simplify withdrawals, cut litigation, boost digital services

The Central Board of Trustees (CBT) of the Employees' Provident Fund Organisation (EPFO) approved a set of landmark reforms at its 238th meeting held in New Delhi on October 13, according to the Ministry of Labour and Employment. The meeting was chaired by Union Minister for Labour and Employment, Dr Mansukh Mandaviya and attended by Minister of State Shobha Karandlaje, Labour Secretary Vandana Gurnani and Central Provident Fund Commissioner Ramesh Krishnamurthi.

The ministry said the decisions mark a significant shift towards making EPFO services more member-centric, transparent and digitally efficient. The initiatives include simplified withdrawal provisions, rationalised penal damages, doorstep pension services and the rollout of the EPFO 3.0 digital transformation framework.

Simplified and liberalised withdrawal provisions

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To make the Employees' Provident Fund more flexible and accessible, the CBT has approved a simplified and liberalised framework for partial withdrawals. Thirteen existing provisions have been consolidated into a single, clearer structure with three categories - essential needs such as illness, education and marriage; housing requirements; and special circumstances.

Members will now be allowed to withdraw up to 100 per cent of their eligible provident fund balance, including both employee and employer contributions. The number of permissible withdrawals has also been increased, with education withdrawals now allowed up to 10 times and marriage up to five times, compared with the earlier combined limit of three.

The requirement for minimum service has been reduced to one year for all categories. Importantly, members will no longer need to state specific reasons for withdrawal under ‘special circumstances’, making the process simpler and less prone to rejection.

A new rule mandates maintaining a minimum balance of 25 per cent of the total contributions, allowing members to continue earning compound interest - currently at 8.25 per cent per annum, while securing a sustainable retirement corpus. These changes, the ministry said, are expected to enable fully automated claim processing with minimal paperwork.

Vishwas Scheme to resolve pending litigation

The Board also approved the launch of the Vishwas Scheme to address long-standing litigation linked to penal damages on delayed provident fund deposits. As of May 2025, penal damages worth Rs 2,406 crore were pending across more than 6,000 cases in various courts and tribunals.

Under the new scheme, the rate of penal damages has been rationalised to a uniform 1 per cent per month, with graded rates of 0.25 per cent for defaults up to two months and 0.50 per cent for defaults up to four months. The scheme will remain in effect for six months and may be extended by another six.

It covers ongoing litigation under Section 14B of the EPF Act, finalised but unpaid orders, and pre-adjudication cases where notices have been issued but not concluded. Once employers comply under the Vishwas Scheme, pending cases will be closed.

The Labour Ministry said the reform will reduce legal costs and promote timely compliance, while helping employers avoid unnecessary disputes and enabling faster reinvestment of members’ funds.

Doorstep pension services for EPS pensioners

The Board has also approved a partnership between EPFO and India Post Payments Bank (IPPB) to deliver Digital Life Certificate (DLC) services at the doorstep for pensioners of the Employees’ Pension Scheme (EPS) 1995.

The service, which will be free of cost to pensioners, will be made available through IPPB’s extensive postal network. The Rs 50 fee per certificate will be borne entirely by EPFO. The initiative aims to ease the process for elderly and rural pensioners, ensuring timely pension disbursement, quicker family pension initiation and better verification under the Centralised Pension Payment System.

Digital transformation under EPFO 3.0

As part of the EPFO 3.0 modernisation drive, the CBT approved a comprehensive digital transformation plan to integrate advanced technologies and automate key processes. The new member-centric framework will be powered by a hybrid core banking system, cloud-native design and API-based modules to streamline services such as account management, payroll integration and compliance.

Dr Mandaviya also launched several upgraded systems during the meeting, including a re-engineered return filing module under the Centralised IT Enabled System (CITES) project. The new Electronic Challan-cum-Return (ECR) process simplifies employer compliance through a four-step workflow, enabling real-time validation and quicker crediting of contributions.

Other digital upgrades include a re-engineered user management module for improved security, an upgraded e-Office for faster file processing, and SPARROW - an online performance appraisal system for transparent assessment of officers and staff.

Strengthening investment and expanding social security

The CBT approved the appointment of four fund managers to oversee EPFO’s debt portfolio for five years, aimed at ensuring prudent and diversified investment of members’ savings.

The Board also reviewed progress on several ongoing initiatives, including the Pradhan Mantri Viksit Bharat Rozgar Yojana (PM-VBRY), a Rs 99,446 crore scheme launched in August 2025 to generate 3.5 crore jobs over two years. The ministry reported that in August alone, nearly 6 lakh employees and over 79,000 establishments benefited from the scheme.

India’s efforts in expanding social security were recently recognised at the World Social Security Forum in Kuala Lumpur, where Dr Mandaviya received the award for Outstanding Achievements in Social Security 2025. India’s social security coverage has expanded to 64.3 per cent of its population - a sharp rise from 19 per cent in 2015, giving the country greater voting strength in the International Social Security Association (ISSA).

Upgrades in operations and infrastructure

EPFO also reported early credit of interest at 8.25 per cent for 2024-25, completed by July this year - earlier than in previous years. The organisation has launched several digital facilities including Passbook Lite, online Annexure K and Face Authentication Technology (FAT) for faster UAN activation through the UMANG app.