EPFO 3.0: The government is gearing up to introduce several measures aimed at enhancing services for EPFO members under the EPFO 3.0 initiative. As part of this plan, as reports suggest, the Union Labour Ministry is considering increasing employees’ pension contributions and issuing an ATM card, similar to a debit card, that would allow them to withdraw money directly from ATMs in the future. This scheme is expected to be implemented by May-June 2025.
Currently, an EPF member has to wait 7 to 10 days for the withdrawal amount to be transferred to their bank account linked to the EPF account. This is after completing all withdrawal formalities and submitting the required documents to the EPFO.
According to media reports, the government is considering removing the 12% cap on PF contribution made by employees. This change could provide employees with the option to contribute more based on their savings. However, the employer’s contribution will remain fixed, calculated as a percentage of the employee’s salary.
Also read: EPFO 3.0: 12 pc employee’s contribution cap to be removed? Labour ministry mulls bold reforms in PF services
Currently, the employee and the employer both contribute 12% each towards Employees’ Provident Fund. Of the employer’s contribution, 8.33% goes to pension deduction under EPS-95 and 3.67% to EPF.
Will higher PF contribution lead to enhanced pension on retirement
As per reports, the cap on employee PF contributions is likely to be removed, while the employer’s contribution will remain fixed at 12%. This change will not affect the pension amount, as the pension contribution will also stay fixed at 8.33%. The pension amount will only increase if the government raises the wage ceiling for PF deductions, which is currently set at Rs 15,000. There is speculation that the Centre may increase this limit to Rs 21,000.
However, higher contribution from employees will allow them to build a large retirement corpus after completing 58 years of age.
The EPFO, however, allows members to contribute more by opting for Voluntary Provident Fund (VPF). Employees can seek PF deduction beyond their mandatory 12% contribution. The maximum VPF contribution can be up to 100% of basic salary and dearness allowance with the same rate of interest as on original contribution.
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