New Year cheer for Provident Fund subscribers! The Labour and Employment Ministry has established a five-person committee to develop a strategy for expediting auto claim settlements at
EPFO whilst eliminating manual processing requirements. This initiative will affect more than 75 million EPFO members.
EPFO currently permits automatic settlement of partial withdrawals up to Rs 1 lakh for housing, education and marriage purposes, compared to the previous Rs 50,000 limit for medical expenses.
Additionally, automatic settlement is available for all pension claims under the Employees' Pension Scheme (EPF) or provident fund through EPFO, subject to application validation.
"The idea is to make the automatic claim settlement process more technically savvy and seamless while substantially reducing rejections," a senior government official told ET. The committee, led by G Madhumita Das, the ministry's financial advisor, is scheduled to present its findings by mid-next month, according to the official.
EPFO Report Card
Internal evaluations indicate that only 40% of claims achieve automatic settlement, with over 60% facing rejection due to validation issues.
Consequently, these rejected applications require manual processing, which significantly extends the settlement timeline.
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Currently, applications must pass through 27 back-end validation checks before settlement processing begins, as noted by the source.
In 2023-24, EPFO processed 44.5 million claims. The settlement timeline showed 13.9 million claims completed within three days, 14.3 million within 10 days, 14.5 million within 20 days, and 1.8 million requiring over 20 days.
The settled claims comprised 40.9 million provident fund (PF) claims, including final settlements, advances and partial withdrawals, 3.45 million pension-related claims and benefits, and 75,000 insurance claims under the Employees' Deposit Linked Insurance Scheme (EDLI).
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