The Employees’ Provident Fund Organisation (EPFO) is set to usher in a groundbreaking reform by enabling ATM withdrawals of provident fund (PF) savings and insurance claims. This initiative marks a significant leap towards financial accessibility, directly benefiting millions of salaried workers, retirees, and beneficiaries. The promise of accessing PF funds at the swipe of an ATM card will address a long-standing hurdle of cumbersome withdrawal process. While the move holds immense promise, ensuring procedural compliance and seamless implementation will be key to its success.

Who stands to benefit?

The new facility primarily benefits three key groups: salaried employees, retirees, and beneficiaries, offering greater flexibility and financial autonomy.

Salaried employees and EPF members: For the working population, the ability to withdraw up to 50 per cent of their PF balance through ATMs comes as a boon during times of crisis. Traditionally, withdrawals for emergencies required time-consuming online claims or physical visits to EPFO offices.

The ATM option also supports pre-retirement withdrawals for specific purposes, such as medical emergencies, weddings, education, or home purchases. For the salaried, the reform represents financial flexibility without bureaucratic delays.

Retirees: Retirees who rely on their lifetime savings for post-retirement security will experience ease in accessing their funds. They can withdraw the entire corpus at 55 years of age, or 90 per cent a year before retirement. The ATM facility eliminates the paperwork and delays typically associated with large withdrawals, ensuring financial independence in their golden years.

Nominees and legal heirs: The initiative simplifies access to insurance claims under the Employees’ Deposit Linked Insurance scheme, which provides coverage up to ₹7 lakh. In the event of a member’s death, beneficiaries can withdraw funds directly using ATMs.

While the facility promises immense convenience, members and beneficiaries must meet specific procedural prerequisites for smooth implementation:

For EPF members: (i) Activation of Universal Account Number (UAN): Members must activate their UAN, ensuring the associated mobile number is functional; (ii) Aadhaar linkage: Aadhaar details must be seeded in the EPFO database, with OTP-based eKYC verification enabled; (iii) Bank account integration: Members need to link their bank accounts, including IFSC codes, for fund transfers and ATM withdrawals; and (iv) PAN seeding for tax compliance: To avoid higher tax deductions on claims settled within five years of service, PAN details must be updated.

For beneficiaries: (i) Bank account linkage: Legal heirs and nominees must link their bank accounts to the deceased member’s EPF account; and (ii) Claim verification: Beneficiaries must ensure all documentation is verified and complete for insurance claims via ATMs.

The ATM withdrawal facility aligns with the government’s broader vision of a digital and financially inclusive India. By leveraging technology, the EPFO aims to enhance the accessibility, efficiency, and reliability of PF-related services.

Faster processing and reduced delays: The reform is backed by robust IT systems, enabling centralised claim processing and auto-settlement. With appeal resolution time already reduced to six days, the ATM facility adds another layer of speed and convenience for members.

Digital integration: The initiative further integrates PF accounts with platforms like Digilocker and Umang, enabling members to access their records and claims seamlessly.

The EPFO’s ATM withdrawal facility represents a big step towards making PF savings truly liquid, accessible, and user-friendly.

Valiachi and Soundarya are Assistant Professors at the School of Management Studies at Sathyabama Institute of Science and Technology, Chennai

Published on December 18, 2024