EPFO's Proposal to Raise Auto-Settlement Limit

The EPFO is planning to raise the limit for the auto-settlement of claims from ₹1 lakh to ₹5 lakh.

This proposal aims to make it easier and faster for members of the The Employees Provident Fund Organization to settle claims without a lot of paperwork. It has been approved by the EPFO's executive committee but awaits a go-ahead from the central board of trustees before it can be implemented. If enacted, this change could enhance the experience of millions of people who make use of the EPFO.

What is Auto-Settlement and Why Does It Matter?

Auto-settlement is a process that permits EPFO members to automatically settle their claims in specific situations, like for medical treatment, educational expenses, marriage, and housing. These are common reasons why people need to access their PF savings early. The process was introduced to ease the way for people needing to access their funds in tough times.

In May 2024, the EPFO raised the auto-settlement limit from ₹50,000 to ₹1 lakh. Now, it is planning to push this limit to ₹5 lakh. Claims of this size would cover a large number of our members. Even with these hikes in the limit, though, the true test will come when EPFO is put to work in getting the money back to all those members who deserve it.

EPFO’s Efforts to Streamline the Claims Process

The Employees Provident Fund Organization has been working diligently to streamline its processes and enhance the expeditious settlement of claims. In times past, claims could take what seemed an eternity to process, but now, the vast majority of claims are processed within three days. This monumental improvement has come from not just one change, but rather, a perfect storm of changes under the umbrella of simplification.

The rapid growth in the membership of the auto-settlement system is another accomplishment of this year. Membership in the auto-settlement system stood at under 90 lakh (9 million) members just last year. This year, it has more than doubled, with almost 2 crore (20 million) members now enjoying the benefits of a system that promises to deliver payments more quickly and more easily than ever before.

Growth in EPFO Claims and Its Impact

The modifications instituted by EPFO have resulted in a sharp rise in the settled claims. They now anticipate that over 6 crore claims will be processed this year. This would mark a high watermark, if we can call it that, for EPFO and indicates a burgeoning atmosphere of trust alongside speedy efficiencies in the claims settlement system. Right now, 48% of claims come in directly from members; 44% are automatically processed, and 8% require a member-employer duet in the attestation department.

The proposal also ties into the larger objective of making public services work better for more people in a shorter amount of time. By cutting out delays and reducing unnecessary paperwork, EPFO is trying to make public service work more accessible for its members.