From pension disbursal system to auto settlement, how EPFO 3.0 reforms have improved user experience

To modernize its digital framework and operational procedures, the Employees’ Provident Fund Organisation introduced the EPFO 3.0 initiative in 2025.

Recently, Shobha Karandlaje, Minister of State for Labour and Employment, informed the Lok Sabha on the progress of auto-claim settlements, the Centralised Pension Payment System (CPPS), and other critical reforms enacted under this project.

EPFO 3.0 represents a comprehensive digital overhaul of the retirement fund's IT infrastructure, with full implementation expected by mid-2026.

EPF withdrawal via UPI

For years, the organization has struggled with systemic IT and service bottlenecks. To resolve these, the Central Board of Trustees (CBT) approved this reform package for a 2025 rollout.

The CBT is the apex decision-making body of the EPFO.

While progress is steady, several anticipated features — such as EPF withdrawals via the Unified Payments Interface (UPI) — are still pending implementation.

These updates aim to streamline EPFO services and significantly improve the user experience for subscribers.

CPPS: New Disbursal System

Karandlaje confirmed that as of January 1, 2025, every EPFO office had transitioned to the CPPS, utilizing a new disbursal system to accelerate pension delivery. This centralized mechanism currently supports approximately seven million beneficiaries.

70% Advance Withdrawal Requests Resolved

The minister noted that over 70% of advance withdrawal requests, totaling roughly ₹51,620 crore, have been successfully resolved.

Auto-Settlement

The auto-settlement mode has processed 3,52,20,199 claims for amounts up to ₹5 lakh as of February 25, 2026, during the 2025-26 fiscal year.

Notably, the EPFO increased the auto-settlement threshold from ₹1 lakh to ₹5 lakh in June 2025 to minimize manual oversight and shorten processing windows. This automated approach has also been integrated into account transfers. By February 25, 2026, more than seven million (7,054,895) transfer claims were completed without requiring intervention from staff or employers. This marks a major shift from the previous system, where job changes necessitated manual PF account transfers.

“The requirement of the approval of either of the past or the present employer for the transfer claims has been dispensed within know-your-customer (KYC)-compliant accounts. As on February 25, 2026, 21,39,247 transfer claims were submitted by employees without their employer’s intervention,” the minister had said.

Interest rate on PF deposits fixed at 8.25%

For the third consecutive year, the EPFO has maintained the interest rate on employee provident fund deposits at 8.25% for the 2025-26 period, per a March labor ministry announcement. This follows the 8.25% rate set in February of last year for 2024-25, which itself was a marginal increase from the 8.15% offered during the 2022-23 fiscal year.

The Central Board of Trustees (CBT) has also authorized a one-time Amnesty Scheme. This initiative addresses compliance hurdles for income tax-recognized trusts not yet covered or exempted under the EPF & MP Act, 1952, while aligning with the Finance Act, 2026. This six-month program aims to bring trusts into compliance to safeguard workers' interests, offering a waiver on penalties, interest, and damages for those providing benefits that meet or exceed statutory requirements.

Furthermore, the scheme allows for retrospective exemptions under specific conditions, ensuring all eligible staff receive their legal benefits. It specifically applies to exempted establishments that have adhered to the EPF & MP Act, 1952.

To further streamline operations, the CBT approved a simplified Standard Operating Procedure (SOP) for EPF Exemptions. This new framework consolidates the Exemption Manual and four existing SOPs into one comprehensive document designed to lower the compliance burden. Additionally, the updated SOP introduces a fully digital process for the surrender and transfer of historical accumulations.

Finally, the CBT has cleared the notification of new social security schemes under the Code on Social Security, 2020, to facilitate a smooth transition from the current regulatory structure.