In March 2025, the operational framework of the Employees Provident Fund (EPF) will be reformed. In version 3.0, more employee-centric initiatives will be provided through the Employees Provident Fund Organisation (EPFO). The Ministry of Labour is considering reforms in EPFO services, which may remove the 12% cap on employee contributions.
This means that EPFO members can benefit from higher savings and pensions. With the reforms, employees can deposit or invest more money (above the cap) at any time. However, the employer’s contribution remains the same, i.e. it is fixed at the employee’s salary. This means that employers will not feel undue financial pressure. In addition, the reforms will give employees the opportunity to convert their provident fund balance into pensions as needed.
It is reported that the Centre is also looking to reform the Employees’ Pension Scheme 1995 (EPS-95). Presently, 8.33 per cent of the employer’s contribution goes to EPS-95. With the changes, employees will be able to invest directly into the scheme, which will result in higher pension.
