EPFO 3.0: ATM Access To PF And Removal Of 12% Contribution Cap On The Cards: Report

EPFO 3.0: While these features hold significant promise, discussions around their implementation are still in the early stages, and no formal announcements have been made

The Employees' Provident Fund Organisation (EPFO) is set to introduce a series of transformative features under its proposed upgrade, EPFO 3.0. These changes, aimed at enhancing accessibility and flexibility for members, include ATM-enabled withdrawals, removal of the current contribution cap, and pension conversion options, according to a report by ET Now.

Key Highlights of EPFO 3.0

PF Withdrawals via ATMs:

The Labour Ministry is planning to roll out a card for Provident Fund (PF) withdrawals through ATMs. However, members will only be allowed to withdraw up to 50 per cent of their total deposits using this facility. The feature is expected to be implemented by mid-2025, likely between May and June.

No Cap on Employee Contributions:

Another significant change under consideration is removing the 12 per cent cap on employee contributions. This would allow employees to contribute beyond the current limit, offering more flexibility in building their retirement savings. The employer's contribution, however, will remain fixed based on the employee's salary, ensuring no additional financial burden on employers.

Pension Conversion Option:

The government is also planning to offer employees the option to convert their PF savings into a pension. This will be done with the employee's consent, providing a new avenue for post-retirement financial security.

Increased Salary Ceiling for EPF Scheme:

The central government is reportedly considering raising the salary limit for EPF scheme eligibility. If implemented, this would be the first revision since September 2024, when the salary ceiling was increased from Rs 6,500 to Rs 15,000.

Current Status

While these features hold significant promise, discussions around their implementation are still in the early stages, and no formal announcements have been made.

EPFO's Recent Investments

Meanwhile, EPFO continues its active involvement in financial markets. According to Minister of State for Labour & Employment Shobha Karandlaje, the organisation invested Rs 34,207.93 crore in Exchange Traded Funds (ETFs) during the April-October period of the current fiscal year.

As of March 31, 2024, EPFO manages a corpus of Rs 24.75 lakh crore, including Rs 22.41 lakh crore in debt investments and Rs 2.35 lakh crore in ETFs. The EPFO invests in ETFs replicating indices like the BSE Sensex and NSE NIFTY-50 and has also participated in ETFs tracking Bharat 22 and CPSE indices for disinvestment purposes.