The Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) has approved a redemption policy for exchange traded fund (ETF) investments to generate higher income for its subscribers, the labour ministry said on Saturday.
Sources said the CBT has approved reinvestment of the 50% redemption proceeds from ETFs back into central public sector enterprises (CPSE) and Bharat 22 funds. The policy mandates a minimum five-year holding of the funds.
The remaining proceeds will be invested into other financial instruments, such as government securities and corporate bonds, sources said.
The CBT approved the guidelines for investment in units issued by public sector undertaking-sponsored infrastructure investment trusts (InvITs)/real estate investment trusts (REITs) regulated by the Securities and Exchange Board of India (SEBI), the ministry release said.
The board also approved a significant amendment to the EPF Scheme, 1952. As per existing provisions, for claims settled till every 24th of a month, interest is paid only up to the end of the preceding month. Now, the interest will be paid to the member up to the date of settlement. This will result in financial benefit to members and reduce grievances, the release said.
Moreover, the CBT has recommended the EPFO Amnesty Scheme 2024 to the central government.
The scheme is designed to encourage employers to voluntarily disclose and rectify past non-compliance or under-compliance without facing penalties or legal repercussions.
This amnesty scheme will support implementation of the employment-linked incentive scheme announced in Union Budget 2024-25, to foster employment generation and incentivise formalisation of jobs in the economy. It is expected that several small establishments (under MSME sector or otherwise) might wish to avail of the benefits under the ELI scheme, but would be worried in enrolling under EPFO, the release said.
The board also ratified the extension of EDLI (employees’ deposit linked insurance) benefits with retrospective effect from April 28, 2024. Under this scheme, an insurance cover in the range of Rs 2.5 lakh to Rs 7 lakh is provided to the dependents of the member in case of death. The proposal, supported by actuarial valuation indicating a surplus of Rs 6,385.74 crore, has been approved to ensure uninterrupted benefits to EPF members.
Also, the limit for auto claim settlement facility has been extended to Rs 1 lakh from Rs 50,000 earlier, including for those seeking advances for housing, marriage and education.
The CBT also approved a proposal for simplification of the criteria for empanelling of banks for centralised collection of EPF contributions. It will now include all agency banks listed with RBI.
Additionally, the CBT approved the empanelling of other scheduled commercial banks that are not RBI agency banks but have a minimum of 0.2% of total EPFO collection. This criterion has been relaxed from the earlier 0.5%, the release said.
The board also approved the full rollout of the centralised pension payment system (CPPS) from January 1, 2025. The CPPS is set to be implemented as part of the EPFO’s IT modernisation project, which will benefit more than 7.8 million EPS pensioners of EPFO, which includes streamlined pension disbursement across India, allowing pensioners to access their pension from any bank or branch nationwide, expediting claim processing and eliminating the need for bank visits for verifications or undertaking submissions.
During FY24, EPFO settled 44.5 million claims for an amount of Rs 1.82 lakh crore. In the current fiscal, 38.3 million claims have already been settled for more than Rs 1.57 lakh crore.