Govt Announces Major Reforms to Simplify PF Withdrawals, Reduce Litigation, Drive Digital Transformation

New Delhi, October 14: Union Minister for Labour & Employment and Youth Affairs & Sports Dr Mansukh Mandaviya chaired the 238th meeting of the Central Board of Trustees (CBT) of the Employees’ Provident Fund (EPF) in New Delhi on Monday, approving a series of major reforms to simplify provident fund withdrawals, ease compliance for employers, reduce litigation, and accelerate EPFO’s transition to a digitally empowered, member-centric organization.

Among the landmark decisions, the Board approved the simplification and liberalization of EPF partial withdrawal provisions, merging 13 complex rules into a single, streamlined framework categorized under Essential Needs (illness, education, marriage), Housing Needs, and Special Circumstances. Members can now withdraw up to 100% of their eligible balance, with the withdrawal frequency limits for education and marriage raised to 10 and 5 times, respectively, from the earlier combined limit of three. The minimum service requirement for withdrawals has been uniformly reduced to 12 months, and members can now make claims under “Special Circumstances” without specifying reasons — a move expected to drastically reduce rejections and grievances.

A new rule also mandates maintaining 25% of the balance as a minimum retirement corpus, allowing members to continue earning the 8.25% annual interest and benefit from compounding returns. The simplification enables 100% auto-settlement of partial withdrawal claims, making the process faster and documentation-free.

To ease financial stress and reduce litigation for employers, the CBT launched the ‘Vishwas Scheme’, which rationalizes penal damages on delayed PF remittances. Penalties have been reduced to a flat rate of 1% per month, with a graded rate of 0.25% for delays up to two months and 0.50% for up to four months. The scheme, valid for six months and extendable by another six, will cover ongoing litigation and pre-adjudication cases under Section 14B. Pending cases will be abated upon compliance under the scheme, helping employers regularize dues with minimal burden while expediting fund recovery for employees.

In another key decision, EPFO approved a partnership with the India Post Payments Bank (IPPB) to provide doorstep Digital Life Certificate (DLC) services to EPS’95 pensioners free of cost. The service, aimed particularly at rural beneficiaries, will enable pensioners to submit life certificates from home through IPPB’s vast network, ensuring timely pension continuity and ease of living.

Under the EPFO 3.0 Digital Transformation Framework, the Board cleared a comprehensive modernization plan that integrates core banking technology with cloud-native, API-driven systems for member accounts, compliance, and service delivery. The new ecosystem will support automated claims, instant withdrawals, multilingual self-service, and payroll-linked contributions, reaffirming EPFO’s goal of becoming a digitally empowered, transparent, and efficient organization serving over 30 crore members.

Dr Mandaviya also launched a suite of new digital initiatives — including the Re-engineered Return Filing Module, User Management Module, upgraded e-Office (version 7), and SPARROW platform for online APAR management. These upgrades are expected to streamline compliance, eliminate data errors, and ensure quicker settlements for members.

The Board further approved the appointment of four Fund Managers to manage EPFO’s debt portfolio for five years, enhancing investment diversification and optimizing returns on members’ savings.

Highlighting India’s leadership in expanding social security, Dr Mandaviya informed the Board that India has been honored with the Outstanding Achievement in Social Security Award 2025 at the World Social Security Forum in Kuala Lumpur for extending coverage to 64.3% of its population (940 million people), up from 19% in 2015. EPFO has also secured a seat on the ISSA Bureau, giving India greater influence over global social security policymaking.

The Board was also updated on the rollout of the Pradhan Mantri Viksit Bharat Rozgar Yojana (PM-VBRY), a ₹99,446 crore initiative expected to generate 3.5 crore jobs by 2027. The scheme has already benefited over 79,000 establishments and 6 lakh first-time employees since August 2025.

Dr Mandaviya said the decisions mark a transformative step in strengthening India’s social security architecture. “EPFO is evolving into a modern, accessible, and technology-driven institution that ensures convenience for members, fairness for employers, and trust for every worker contributing to the nation’s growth,” he emphasized.