EPFO increases minimum benefit under EDLI scheme to ₹50,000; check details

The Employees’ Provident Fund Organisation (EPFO) has amended the minimum benefit payable to dependent or legal heirs of the members who did not render continuous service for 12 months before their death, and have an average PF balance of less than ₹50,000, raising it to ₹50,000.

“The minimum benefit payable to dependents/legal heirs of members who have not rendered continuous service of 12 months before the month of their death and average PF balance is less than ₹50,000 has been raised to ₹50,000, the EPFO said in a circular on December 17.

Under the Employees’ Deposit Linked Insurance, employees get assured benefits based on their average PF balance over the 12 months preceding death.

Before the amendment, there was no minimum assured benefit for employees who didn’t serve 12 months continuously before they passed away. Now, this will change, as beneficiaries’ families will get at least ₹50,000 if the member passes away without 1 year of continuous service.

Other important amendments

Earlier this year, the EPFO also amended the rule under which EPF members who passed away within a year of service were not eligible for an insurance payout. As per the new rule, their families will also get a minimum life insurance benefit of ₹50,000.

EDLI benefits have also been extended to the non-contributory period, which means that families of members who pass away within 6 months of their last EPF contribution will now receive the death benefit. However, their name must still be in their employer’s roll.

“The members who die in service within six months of their last contribution received, provided they were still on the employers' rolls, EDLI benefits would be payable to dependents/legal heirs of employees as per the Scheme,” the EPFO said.

Additionally, short employment gaps like weekends or small breaks between jobs resulted in rejection of claims. Now, as per new rules, a gap of up to 60 days (2 months) would be ignored, and the jobs will still be considered as continuous service.

“For the members who have rendered service in more than one EPF-covered establishment, where there is a gap of up to 60 days between two spells, such a gap would be ignored, and such multiple services shall be treated as continuous service,” the circular said.

EPFO noted that many death claims are being denied or settled for reduced amounts due to minor gaps between jobs without an assessment of the actual continuity of employment.

“An instance has been reported where, Saturday and Sunday immediately falling between date of exit from one establishment and joining in another establishment covered under EPF & MP Act, 1952 has been treated as break in service, whereas the member has rendered service of more than 12 months after adding the spells of services leading to denial of eligibility for EDLI benefits,” it noted.

Clarification on weekends and holidays

The EPFO said that continuous service, introduced in 2021, has been amended to remove anomalies relating to break-in-service or non-contributory service that result in denial of assurance benefits to members and their families.

The PF organisation said that Saturdays, Sundays and declared weekly off in an employee’s previous or current organisation, along with national holidays, gazetted holidays, state holidays and restricted holidays, will not be treated as a break in service, and the service shall be treated as continuous.

“...continuous spells of service immediately followed by Saturdays, Sundays or any declared weekly off in the last or present establishment, National holiday, Gazetted holiday, State holiday and Restricted holiday are to be treated as part of continuous service only, provided the date of exit from one establishment and date of joining in the next establishment covered under EPF & MP Act, 1952 are separated only by such offs/holidays,” the EPFO said.

These amendments are aimed at ensuring that members and their dependents/legal heirs get the benefits under the EDLI scheme, and claims aren’t rejected due to weekends, holidays or short breaks (up to 2 months) between jobs. The EPFO has directed all Regional PF Commissioners to ensure compliance with these directions while processing EDLI claims.

EDLI scheme

The Employees’ Deposit Linked Insurance (EDLI) Scheme provides life insurance benefits to EPF members. Under the scheme, if a member dies, the nominee listed by them receives a minimum of ₹2.5 lakh and up to ₹7 lakh, based on the employee’s salary and EPF balance.

As per the EPFO’s website, EDLI claims are processed within 20 days to ensure quick support to the family.

The benefits are calculated as per the Minimum Average Balance:

• Average balance of last 12 months’ PF contributions (employee + employer + interest)

Alternatively, 35 × average monthly wages (max ₹15,000) + 50% of average balance, capped at ₹1.75 lakh

• Minimum benefit: ₹2.5 lakh
• Maximum benefit: ₹7 lakh (including 20% enhancement)

The EDLI scheme isn’t available after retirement. It is only for death cases while in service. Employers contribute 0.5% of an employee’s wages for the EDLI scheme, and no employee contribution is deducted.