The new avatar of the EPF. Governance, Limits and Revisions


Ever since the announcement of the EPF withdrawal limits, there is has been much a furore among EPF account holders. With views and analysis pouring in from experts, the EPFO is transforming itself with new strategies, features and parameters to garner the much-needed support of its contributors. First things first. Here’s a quick round up of all the latest changes in the EPO since 2016.



  1. Raising the minimum limit. Understand that the minimum limit for compulsory EPF contribution was raised from 6500/- to 15000/-. To explain it simply, it was mandatory for employees who earned 6500/- or less per month to compulsorily contribute to the EPF, while this is now raised to 15000/-  The EPF contribution is now mandatory for all who earn INR 15000/- per month or less.
  2. Changes in the pension amount. Calculation for pension changed from taking the average of the last 12 months to the average of the last 60 months. A not so welcomed move because the average is bound to get lower, as an individual earns more towards the later years of employment. Minimum monthly pension for the widow of the EPF member at 1000/- and children and orphans at INR 250 and 750 respectively.


3. Raised Insurance cover: From INR 1,56,000 to INR 3,00,000/- for the EPF member.
4. Employer EPF contribution fixed: The employer to contribute INR 1250/-,  which is a fixed contribution applicable only for the employees earning INR 15,000/- and below per month.
5. Revised Employer company size limit for EPF contribution: All companies with more than 10 employees now have to make EPF contributions as compared with the limit of 20 employees earlier.
6. The last and the one with the highest impact – EPF Withdrawal rules: A full withdrawal of the EPF even after 2 months of unemployment is now not allowed under the new rules. The EPF account holder will be able to withdraw only his/her contribution and not the employer’s which can be withdrawn only at the retirement age of 58. The 90% withdrawal at the age of 55, also stands null and void.

With that said about the key changes that affect the account holder and employer, has the EPFO turned a new leaf over the last one year? Are there any noticeable and critical changes that affect the interests of the EPF account holder at large? The EPFO has moved boundaries and re-invented its ways of working much to the benefit of its account holders. Here’s what’s been cooking…..

Speed: The change in the EPF withdrawal limits were termed pro- government and an act to suffice government deficit with public money, EPF contribution funds came under scrutiny and criticism, the very day the announcements were made. Well, the EPFO had backed that with speed. We have recent pro- account holder norms, like the reduced settlement time for claims. Made to 10 days from 20 earlier, the EPFO’s Citizen’s charter plans to settle all claims that are Aadhar and bank seeded within 3 hours of the receipt of the claim application.

Governance: It is well known that the introduction of the UAN or the Universal account number which allows an EPF account holder to maintain the same account in the event of a job change. By just informing the new employer the UAN, the past and present employments are linked and the transfer process is automated. The EPFO portal also allows the account holder to view funds real time without the need to go through the employer to know the accumulated amount.

Transparency: With a lot of debate about the need for the EPFO to reveal its investment portfolio, we have experts like Sumit Shukla, CEO of the HDFC Pension Management Company stating that “The EPFO has to ensure transparency in its mammoth investment operations and put in place a disclosure regimen that is missing today. As each member is contributing his or her life’s savings into the fund, they have the right to expect transparency. An opaque structure will not work as the EPF aspires to move towards non-guaranteed, market-linked returns”. (Source: Economic Times)

The EPFO is the largest fund in the country and with many other smaller fund managers like the pension funds, insurance companies and mutual funds disclosing their investment portfolio and returns, the EPF is inviting a lot of criticism about the management of investible funds. Although slow to react, recent news on ET  stated about the 20,000 crore equity investment the EPFO intends to make in ETFs. With a new investment pattern for the EPFO fund investors can expect a higher rate of return and increased transparency. Launching an online claim settlement facility, early in May 2017, it is the EPFO’s  attempt to provide a transparent and electronic case management system for all its stakeholders.  

Armed with the characteristics of Speed, Governance and Transparency the EPFO has a whole new avatar today as compared to one

we had almost a year ago. However, the change in the withdrawal limits has drawn flak, as many Indians plan their children’s wedding around their mid-50’s. A good way to counter this would be to make alternative investment arrangements. Visit the Certified Financial Planner today!

Source: Economic Times, Business Standard, ET Wealth.