EPFO approves amnesty scheme for employers to allow late deposits into provident fund without penalty

The Employees’ Provident Fund Organization (EPFO), a pension fund body, on Saturday approved an amnesty scheme to encourage compliance by employers and allow them to make early contributions to the pension fund without penalty.

The Central Board of Trustee (CBT), the top decision-making body of the EPFO, headed by Labor Minister Mansukh Mandaviya on Saturday recommended the EPFO ​​Amnesty Scheme 2024 to the central government, a Labor Ministry statement said.

The initiative is intended to encourage employers to voluntarily disclose and correct past violations or noncompliance without facing penalties or legal consequences, it said.

A simple online declaration from the employer is sufficient to take advantage of the system’s services. By providing a limited window for voluntary compliance, the system aims to extend social security benefits to more workers, restore employer confidence and promote formalization of the workforce, it said.

The scheme will help implement the Employment Linked Incentive Scheme announced in the FY25 Budget to promote job creation and incentivize formalization of jobs in the economy.

According to the statement, several small businesses (in the MSME sector or elsewhere) may want to avail the benefits of the ELI scheme but would be apprehensive about enrolling for the EPFO. This amnesty system would give them the confidence to enroll without fear or additional financial burden.

Meanwhile, the board also approved an amendment to the EPF Plan of 1952 whereby interest will be paid to members up to the date of settlement.

According to current regulations, interest paid on a claim settled by the 24th of the month will only be paid until the end of the previous month.

The change will result in greater financial benefits for EPFO ​​members and reduce grievances.

Currently, interest-bearing claims are not processed between the 25th and the end of each month to avoid loss of interest for members. After the change, claims will be processed throughout the month, resulting in lower pending times, timely resolution, and optimized resource utilization.

The Board also approved the extension of Employees’ Deposit Linked Insurance (EDLI) benefits with retrospective effect from April 28, 2024. Under this scheme, insurance cover in the range of Rs 2.5 lakh to Rs 7 lakh will be provided to the dependents who are a member in the Death.

The proposal was supported by an actuarial assessment that showed a surplus of Rs 6,385.74 crore and was approved to ensure uninterrupted benefits to EPF members.

The board also approved a proposal to simplify the criteria for inclusion of banks in the centralized collection of EPF contributions. It now includes all agency banks listed with the RBI.

In addition, the central board of trustees also approved setting up of other regular commercial banks which are not RBI agency banks but hold at least 0.2 per cent of the total EPFO ​​revenue. The previous requirement for such companies was 0.5 percent.

Additionally, the board has approved redemption policy for ETF investments in CPSE and Bharat 22 to generate income for interest account of EPF scheme.

The policy mandates a holding period of at least five years, returns that beat government securities and performance above the CPSE and Bharat 22 indices.

Also, the guidelines for investment in shares issued by public sector undertaking-sponsored Infrastructure Investment Trusts (InvITs)/Real Estate Investment Trusts (REITs) regulated by the Securities and Exchange Board of India have been approved.

Also, the cap on motor vehicle claim eligibility has been increased to Rs 1 lakh from Rs 50,000 previously, including for those seeking advances for accommodation, marriage and education.