EPFO Makes PF Withdrawals Easier: Auto Settlement Limit Raised to Rs 5 Lakh

In a significant move to enhance the 'Ease of Living' for its 7.5 crore members, the Employees Provident Fund Organisation (EPFO) has decided to increase the auto settlement of advanced claim (ASAC) limit from Rs 1 lakh to Rs 5 lakh. Reports said that the proposal was approved by Sumita Dawra, Secretary of the Ministry of Labour and Employment, during the 113th meeting of the Executive Committee (EC) of the Central Board of Trustees (CBT) held last week.

The meeting, held in Srinagar, Jammu and Kashmir, on March 28, was attended by Ramesh Krishnamurthi, the Central Provident Fund Commissioner at EPFO. The proposal is now set to go for approval by the CBT. Once approved, EPFO members will be able to withdraw up to Rs 5 lakh from their Provident Fund (PF) accounts via the auto-settlement process.

The auto-settlement facility, introduced in April 2020 for medical advances, has already undergone several enhancements. In May 2024, EPFO raised the claim limit from Rs 50,000 to Rs 1 lakh, and soon, the limit will be increased further to Rs 5 lakh. Additionally, EPFO has expanded the categories under which members can make claims through this auto-settlement process, now covering illness, education, marriage, and housing.

Previously, members could only access their PF balances for illness or hospitalization. However, with the latest changes, claims for other personal needs like education and housing are also processed automatically, making the system more inclusive. Currently, about 95% of claims are being processed through the auto-settlement mode, and the process is completed within three days.

EPFO has achieved a major milestone in the current financial year, with 2.16 crore auto-claims settled as of March 6, 2025. This marks a significant increase from 89.52 lakh claims settled in the previous year. Moreover, the rejection ratio of claims has also decreased significantly, from 50% last year to 30% this year, reflecting the improvements in the system’s efficiency.
The EPFO has also simplified the claim settlement process. Validation formalities for PF withdrawals have been reduced from 27 steps to 18, and plans are underway to further streamline the process to just six steps. New upfront validations are now in place to help members determine the eligibility and admissibility of their claims, ensuring that only valid claims are filed.

The entire auto-settlement process is driven by an IT system, reducing the need for human intervention. Claims with proper KYC, eligibility, and bank validation are processed automatically, further speeding up the settlement process. As a result, the time taken to settle claims has been reduced from 10 days to just 3-4 days.

In a groundbreaking development, the EPFO is set to introduce a new system allowing PF withdrawals through Unified Payments Interface (UPI) and ATMs. This initiative, which has already received approval from the Ministry of Labour and Employment, is expected to roll out by the end of May or June 2025. This move is expected to revolutionize the way EPFO members access their funds and could serve as a pilot for other government schemes like the General Provident Fund (GPF) for government employees and the Public Provident Fund (PPF) of banks.

Also Read: EPFO Adds 14.63 Lakh New Members in Nov 2024, Signaling Growth in Employment