EPFO new rules: Rs 50,000 minimum benefit for short service tenure

A minimum life insurance benefit of Rs 50,000 will be provided in cases where an EPF member dies without completing one year of continuous service

The Employees’ Provident Fund Organization (EPFO) has recently introduced key updates to the Employees’ Deposit Linked Insurance (EDLI) scheme. These revisions were approved during the 237th meeting of the Central Board of Trustees (CBT), chaired by Union Labor Minister Mansukh Mandaviya. CBT has recommended an 8.25 per cent annual interest rate for EPF subscribers.

 

Key enhancements under the revised scheme 

Minimum insurance for short service tenure: A minimum life insurance benefit of Rs 50,000 will now be provided if an EPF member passes away without completing a full year of continuous service. This amendment is expected to increase benefits for over 5,000 in-service death cases annually. 

Eligibility for members who die after a non-contributory period: Previously, EDLI benefits were denied in cases where a member's death occurred after a gap in contributions, considering it as death outside of service. Under the revised scheme, if a member dies within six months of their last contribution, the EDLI benefit will be granted— provided their name remains on the employer’s rolls. This change is anticipated to benefit over 14,000 such cases every year.

 

Recognition of service continuity: Earlier, even a short gap of one or two days (e.g., weekends or holidays) between jobs led to the denial of EDLI benefits, as the continuous service requirement of one year was not met. The new modifications now allow a gap of up to two months between two periods of employment to be considered as continuous service, ensuring eligibility for EDLI benefits ranging from Rs 2.5 lakh to Rs 7 lakh. This improvement is expected to help over 1,000 in-service death cases annually.

 

Other key decisions

 

Pension on higher wages (PoHW): The EPFO has processed 72 per cent of applications following the Supreme Court's ruling on higher pension eligibility.

 

Centralised Pension Payment System (CPPS): From January 2025, pension payments are being disbursed through a centralised account at SBI’s New Delhi branch, ensuring faster processing and reducing delays for 69.35 lakh pensioners.

 

Reduced penalties for late PF Payments: To minimise litigation, the penalty for delayed PF remittances has been standardised at 1 per cent per month.