Come March 2025, and the functioning of the Employees’ Provident Fund or EPF will undergo a makeover in terms of functioning. With the EPFO 3.0 version, the Employees’ Provident Fund Organisation (EPFO) will offer more employee-centric initiatives. The Ministry of Labour is mulling over reforms in EPFO services, which may result in the 12 per cent cap in employee’s contribution being removed. This means, EPFO members will be able to gain from higher deposits and pensions.
With the reforms in place, employees will be free to deposit or invest more money (beyond the cap) whenever they wish to. The contribution of the employer, however, remains the same, that is, fixed on the salary of the employee. That means the employer will not feel any excess financial pressure.
Additionally, as part of the reforms, employees will be given the option to convert their provident fund balance into a pension if they choose to.
The subscribers of EPFO will be given a card that will serve as a debit card and allow them to withdraw money from their fund via ATMs. However, not more than 50 per cent of their deposit can be withdrawn.
The primary objective of the reforms is to increase savings for employees.
It is reported that the Centre is also looking to reform the Employees’ Pension Scheme 1995 (EPS-95). Presently, 8.33 per cent of the employer’s contribution goes to EPS-95. With the changes, employees will be able to invest directly into the scheme, which will result in higher pension.
