EPFO's new schemes: PF, pension claims to be settled in 20 days; 12% penalty for delays

Employees covered under the Employees' Provident Fund Organisation (EPFO) could benefit from faster settlement of provident fund withdrawals, pension and insurance claims under the newly notified social security schemes, which mandate a 20-day timeline for processing claims and prescribe penal interest for delays.

20-day deadline for claim settlement

If the Commissioner fails to settle a claim within the stipulated period without sufficient cause, penal interest at the rate of 12% per annum may be charged on the benefit amount, with the amount recoverable from the Commissioner's salary, according to the notified rules.

A senior Labour Ministry official told PTI that a provision for penal interest existed under the earlier schemes as well. However, while the earlier provision linked the penalty to the declared EPF interest rate, the new schemes prescribe a fixed penal interest rate of 12%.

No change in EPF contribution

The official said there is no major change in the contribution structure under the new schemes.

Employees and employers will continue to contribute 12% of the employee's basic wages towards EPFO's social security schemes. Of the employer's contribution, 8.33% will continue to be diverted to the Employees' Pension Scheme, while the Central Government will continue to contribute 1.16% towards the pension scheme.

Focus on digital compliance

According to the official, one of the key objectives of the new framework is to strengthen digital compliance by both employers and EPFO, enabling members to access services online without unnecessary delays.

The new rules also require exempted establishments, or EPF trusts regulated by EPFO, to provide online facilities for filing claims and other applications, helping bring digital processes across all establishments covered under the social security framework.