EPFO Withdrawals and Penalty Scheme: The Central Board of Trustees (CBT) of the Employees’ Provident Fund (EPF) which is led by Union Labour and Employment Minister Mansukh Mandaviya has approved several new reforms. These include simple withdrawal rules a new penalty settlement plan and a full digital upgrade under the project called EPFO 3.0.
EPFO Board Meets To Discuss Rs 2,500 Minimum Pension Proposal And Digital Reforms Under EPFO 3.0
The meeting, which was the 238th CBT gathering, was attended by Minister of State Shobha Karandlaje, Labour Secretary Ramesh Krishnamurthi, and other senior officials. They also approved the selection of new portfolio managers and a big digital transformation plan to make EPFO faster more transparent and more helpful for over 30 crore members.
Simplified Withdrawal Rules for Members
The CBT made one of its most member-friendly decisions by changing the complicated partial withdrawal process. Earlier, members had to deal with 13 different clauses to withdraw their money. Now, those have been merged into only three simple categories Essential Needs (like education, illness, marriage), Housing Needs, and Special Circumstances.
Key relaxations include:
- Education withdrawals up to 10 times and marriage withdrawals up to five times, up from the earlier combined cap of three.
- Uniform minimum service requirement reduced to 12 months.
- For “special circumstances,” members can withdraw without specifying reasons, addressing frequent claim rejections.
Under this change, members can now take out up to 100% of their eligible balance, including both the employee and employer share. However, to protect their retirement savings, at least 25% of the total amount will remain in the account. This part will keep earning interest at the current EPFO rate of 8.25%.
Officials said this update will allow “100% auto-settlement of partial withdrawals,” meaning members will get their money faster without much paperwork.
‘Vishwas Scheme’ to Settle ₹2,400 Crore in Legal Disputes
Another big reform is the launch of the ‘Vishwas Scheme’, which aims to end long-pending legal cases about penalties for delayed PF payments. As of May 2025, EPFO reported ₹2,406 crore in unpaid penal damages across more than 6,000 cases, with another 21,000 potential disputes waiting in its system.
Under this scheme the penal rate will now be a flat 1% per month, with some relief for short delays 0.25% for up to two months and 0.50% for up to four months. The scheme will run for six months and can be extended for another six months if needed.
It will cover both ongoing and finalised cases under Section 14B and even those that are yet to be decided. Once an employer complies, all related legal cases will automatically close. Officials said “This move will significantly reduce legal disputes, lower compliance costs for employers, and ensure faster recovery of workers’ dues.”
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Doorstep Pension Service for Senior Citizens
The Board also approved a new partnership between EPFO and India Post Payments Bank (IPPB). This plan will help pensioners under the EPS-95 scheme to get Digital Life Certificate (DLC) services right at their homes.
Each life certificate will cost ₹50, but the pensioners won’t pay for it EPFO will bear the full cost. This will especially help people living in rural and faraway areas, allowing them to verify their life certificate without leaving home. It will make sure that pension payments continue without any delay. Officials said this move supports EPFO’s goal of “inclusive service delivery and ease of living for senior citizens.”
EPFO 3.0: Full Digital Upgrade
The EPFO 3.0 plan will completely change how EPFO works by bringing it closer to a core banking system. It will use cloud-based services, API modules, and instant online claim tools. Members will be able to use self-service options in multiple languages and track their accounts easily.
Mandaviya also launched several new digital tools:
- Re-engineered Return Filing Module: This will help employers file their returns easily through a simpler automated process with real-time checks.
- Re-engineered User Management Module: This will improve online security and allow digital creation of new EPFO offices.
- Upgraded e-Office System (Version 7): This will speed up file movement and decisions inside EPFO.
- SPARROW: A paperless tool that allows online performance appraisal management.
“These reforms strengthen EPFO’s commitment to transparency, automation, and member-centric service delivery,” Mandaviya said.
India’s Vision
The Board also looked at the progress of the Pradhan Mantri Viksit Bharat Rozgar Yojana (PM-VBRY), a huge ₹99,446 crore plan to create 3.5 crore jobs by July 2027. So far, 79,098 establishments and around 6 lakh new workers have joined, and 16.78 lakh Universal Account Numbers (UANs) have been created using Face Authentication Technology (FAT).
EPFO also confirmed that it credited the 8.25% interest to members’ accounts early by July, marking one of the fastest crediting years so far. New office projects are also in progress to improve services across the country.
India’s social security coverage has reached 64.3% of the population as of now,\ which means around 940 million people. This achievement has earned India international praise at the World Social Security Forum 2025 in Malaysia.
