The government is preparing to introduce several measures to enhance the facilities of EPFO members under the EPFO 3.0 initiative. Under this scheme, the Union Labor Ministry is considering issuing an ATM card similar to the pension contribution and debit cards of the employees. The special thing is that with this card, EPFO members will be able to withdraw PF money directly from ATM in future.
The scheme is expected to be implemented by May-June 2025. Currently, EPF members have to wait for 7 to 10 days for the withdrawal amount to be transferred to their bank account linked to the EPF account. This happens after completing all the withdrawal formalities and submitting the required documents to EPFO.
According to media reports, the government is considering removing the 12 percent limit on PF contribution of employees. These changes may give employees the option to contribute more based on their savings. However, the employer’s contribution will be fixed, which will be calculated as a percentage of the employee’s salary. At present, both employees and employers contribute 12 percent to the Provident Fund. Of the employer’s contribution, 8.33 percent goes towards pension deduction under EPS-95 and 3.67 percent goes towards EPF.
Will there be an increase in pension also?
According to reports, the limit on employee PF contribution may be removed, while the employer’s contribution will remain fixed at 12 percent. This change will not affect the pension amount, because the pension contribution will also remain constant at 8.33 percent. The pension amount will increase only when the government increases the salary limit for PF deduction, which is currently fixed at Rs 15,000. There is speculation that the Center may increase this limit to Rs 21,000. However, higher contributions for employees will help them build a larger retirement fund after they complete 58 years of age.
However, EPFO allows members to contribute more by opting for Voluntary PF (VPF). Employees can demand PF deduction in excess of their mandatory 12 percent contribution. The maximum VPF contribution can be up to 100 percent of basic salary and dearness allowance, with the same interest rate as the basic contribution.