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Centre to make EPFO pensions fully portable to ease payouts
The Union government will roll out a centralised pension payment system for all subscribers of the Employees’ Provident Fund Organisation (EPFO).
The Union government will roll out a centralised pension payment system for all subscribers of the state-run retirement fund manager, the Employees’ Provident Fund Organisation (EPFO), which will enable bank and location portability, and eliminate the need to physically move payment orders, Union labour minister Mansukh Mandaviya has said.
With a portable system, pensioners can receive funds in any bank and at any location. These facilities will be available from January 2025, according to a timeline approved by Mandaviya, who is chairperson of the central board of trustees, EPFO.
The centralised system will replace the existing decentralised pension disbursement system of the EPFO. Currently, each regional office of the EPFO maintains separate agreements with only a handful of banks, tying pensioners to those banks and their home branches.
The move will cover nearly 7.8 million subscribers of the Employees’ Pension Scheme 1995, a defined contribution, defined benefit social-security plan.
The labour ministry recently announced a plan to overhaul the EPFO operations by leveraging digital technologies on the back of routine complaints from subscribers about cumbersome processes.
Under the reforms taking effect next year, the regional offices would not be required to physically move pension payment orders from office to another, according to details of the revamp plan. This means a pensioner can draw funds from any location.
“This is an important step in our ongoing efforts to transform the EPFO into a more responsive and tech-enabled organisation,” the minister said.
The labour ministry is on track to implementing what is being called the EPFO 2.01 project aimed at easing processes and turnaround times for various members’ and employers’ transactions, according to the minister.
Authorities are also putting in place a re-engineered claims settlement mechanism in mission mode, an official said.
Provident funds, aside from pensions, also provide retirement income for over 67 million salaried Indians. It often is the key corpus of lifetime savings for working people. The savings interest rate offered by EPFO, at 8.25% for FY24, is a widely watched metric by the salaried middle class.
The reforms under implementation include centralised claim settlements, including end-to-end auto-processing, centralised monthly pension disbursement, universal account number (UAN)–based accounting, restructured electronic challan-cum-receipt (ECR) with due statement and remittance challan.
