The government is planning significant changes in the Employees’ Provident Fund Organisation (EPFO), which manages the largest social security scheme, the Employee Provident Fund (EPF).
One key change could be increasing the minimum pension from the current Rs 1,000.
Another proposal is to allow partial withdrawals from the pension fund at retirement.
Additionally, the scheme may be made more appealing for individuals earning over Rs 15,000 per month.
Withdrawal Facility Through Online Portal
Labor and Employment Minister Mansukh Mandaviya has directed officials to improve the system for middle-class and lower-middle-class subscribers.
The government aims to make EPFO function similarly to banks.
According to a report by the Times of India, the government is working on changes to allow easy withdrawals for expenses like weddings, medical treatment, and children’s education through the EPFO portal.
Large-scale rule changes may also be introduced if required.
Flexible Pension and Increased Limits
To enhance financial planning for retirees, the labor minister has suggested making withdrawal rules more flexible.
This would allow subscribers to adjust their annual pension amounts.
The proposed changes would create a system similar to the National Pension System, where subscribers invest part of their savings in an annuity and can withdraw the remaining amount.
In addition, there is a proposal to increase the pension beyond Rs 1,000, along with other major changes in the Employees’ Pension Scheme (EPS) to provide a higher pension after retirement.
The scheme may also become more attractive for EPFO members earning over Rs 15,000 per month.
Currently, employees and employers contribute 12% of the basic salary to the Provident Fund and Employee Pension Scheme, but increasing this limit is under discussion.
Utilizing Construction Workers’ Funds
The ministry is also considering utilizing funds collected by states for construction workers, which are currently unused.
States have accumulated around Rs 75,000 crore in such funds, which could potentially be used for pensions in addition to the Provident Fund corpus.
