The central government, following the launch of PAN 2.0, is preparing to roll out EPFO 3.0—an upgraded plan with enhanced features for subscribers. According to exclusive reports, the Employees’ Provident Fund Organisation (EPFO) is considering significant changes, including removing the 12% cap on employee contributions to the Provident Fund (PF). This will allow subscribers to contribute based on their savings preferences. Additionally, plans are underway to enable direct PF withdrawals through ATMs, making the process more user-friendly. Reports suggest EPFO 3.0 may also include an option to convert PF savings into pensions, offering greater flexibility and utility.
ATM-Based PF Withdrawals by Mid-2025
One of the standout features of EPFO 3.0 is the introduction of ATM-based PF withdrawals. This move aims to simplify the withdrawal process for subscribers. The Ministry of Labour is reportedly working on issuing cards to facilitate this feature, which is expected to launch in May-June 2025. Subscribers will be able to withdraw up to 50% of their total deposits through ATMs, significantly enhancing convenience.
Enhanced Autonomy for Employees
The government’s goal with EPFO 3.0 is to grant employees greater control over their savings. The proposed removal of the 12% contribution cap allows employees to increase their savings as per their financial goals. Additionally, contributions could be converted into higher pensions, further improving long-term benefits for subscribers.
EPS-95 Overhaul on the Horizon?
In related news, the central government is considering revising the Employees’ Pension Scheme 1995 (EPS-95). The Labour Ministry is exploring the possibility of allowing employees to contribute directly to EPS-95, which could enhance pension benefits.
Currently, employee contributions amount to 12%, while the employer’s share is split between EPS-95 (8.33%) and EPF (3.67%). Allowing direct contributions to EPS-95 could potentially increase pension payouts for employees.
Increase in EPF Contribution Ceiling
The government is also planning to raise the wage ceiling for EPF contributions, marking the first increase since 2014 when the limit was raised from Rs 6,500 to Rs 15,000. The new ceiling is expected to be Rs 21,000, enabling better benefits for retirees.
Key Features of EPFO 3.0
- ATM-Based PF Withdrawals: Subscribers will soon be able to withdraw PF amounts directly from ATMs using a dedicated card. This feature, expected to roll out by mid-2025, will allow members to withdraw up to 50% of their total deposits.
- Unlimited Employee Contributions: The removal of the 12% cap on employee contributions will enable individuals to save more for retirement. However, the employer’s contribution will remain fixed based on the employee’s salary.
- Pension Conversion Option: EPFO 3.0 plans to offer an option for converting PF savings into pension plans. With prior consent, employees can secure funds for post-retirement life.
- Revised EPS-95 Contributions: Proposed changes to EPS-95 may allow direct employee contributions, potentially increasing pension benefits.
- Increased Contribution Ceiling: The new wage ceiling for EPF contributions is set to rise to Rs 21,000, providing enhanced benefits for subscribers.
Conclusion
EPFO 3.0 represents a significant step forward in providing flexibility, autonomy, and enhanced benefits for subscribers. With features like ATM-based withdrawals, unlimited contributions, and pension conversion options, it promises to transform the way employees manage their retirement savings. Stay tuned for more updates on EPFO 3.0 and its implementation timeline.
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