EPF interest new rules: The Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) has approved a revision to the rules governing interest payments within the EPF scheme. The board unanimously resolved to modify the interest payment date to align it with the date of settlement. This decision was reached during the 236th meeting of the CBT on November 30, 2024, which was chaired by the Union Minister for Labour and Employment and Youth Affairs and Sports, Mansukh Mandaviya.
The amended rule
The decision made by the CBT stipulates that interest on EPF will be disbursed to members up to the settlement date. Previously, the rule dictated that if a fund withdrawal claim was made before the 24th of the month, interest would be paid up until the end of the previous month. Consequently, members incur an interest loss for any days beyond the previous month’s end.
The EPFO provisions stated: “Interest up to and for the current month shall be payable on the claims which are authorised on or after the 25th day of a particular month along with actual payment after the end of the current month.”
Impact of the change
The proposed amendment will allow interest payments to be calculated up to the date of settlement, resulting in increased interest for members. Additionally, it will streamline the settlement process by allowing claims to be processed throughout the month, as opposed to the current practice of halting processing between the 25th and the end of the month to prevent interest loss to members.
Moving forward, interest will be accrued up to the settlement date and claims will be processed on a continuous basis rather than in monthly batches. This will ensure timely settlements and potentially higher interest earnings if there are any delays.
It is worth noting that in the financial year 2023-24, the retirement body settled 4.45 crore claims totaling Rs 1.82 lakh crore. In comparison, as of the current year, 3.83 crore claims have already been processed amounting to approximately 1.57 lakh crore.
Other changes
The board has approved the retrospective extension of the Employees’ Deposit-Linked Insurance (EDLI) to beneficiaries from April 28, 2024. This scheme provides a life insurance cover of up to Rs 7 lakh to the dependents of EPF members in the unfortunate event of their death.
Furthermore, the board has approved the empanelment of additional banks to collect EPF contributions. This includes scheduled banks that are not RBI agency banks but collect a minimum of 0.2 per cent of the total EPFO collection. The eligibility criteria for such banks has been revised from 0.5 per cent collection to 0.2 per cent.
In addition, the limit for auto settlement claims has been increased from Rs 50,000 to Rs 1 lakh for not only medical claims but also for housing, marriage, and education purposes claims.