Summary of this article
EPFO has overhauled its claim settlement process under new 2026 schemes.
It promising three-day processing for fully compliant claims and a strict 20-day outer limit.
Delays beyond 20 days without justification will attract 12 per cent penal interest, deducted from responsible officials’ salaries.
The Employees’ Provident Fund Organisation (EPFO) has introduced a three-day settlement period to accelerate the claims withdrawal process. As EPFO has been grappling with several operational issues, most of them related to delays in claim settlement, stipulating a three-day or 72-hour window is a significant step to ensure subscribers’ convenience, enhanced transparency, and reduced number of grievances.
The three-day settlement rule aims to reduce the waiting times subscribers had to previously face due to cumbersome processes involving manual verification and procedural bottlenecks. More importantly, this timeline is not specific to any particular claim, but to all claims that are complete with correctly updated know your customer (KYC) details, Aadhaar-linked Universal Account Number (UAN), and updated bank information.
While claims that require additional verification may still take longer, those requiring no additional scrutiny can be settled automatically in much less time. The EPFO is notably leveraging automation to handle the bulk of the workload by automating the settlement process.
Although it had introduced auto-settlement a few years back, that was only for certain types of claims and for a limited amount of Rs 1 lakh.
In the last two years, it has expanded the category of claims and the limit for auto-settlement for faster claim settlement for its vast pool of subscribers. The organisation has officially increased the auto-settlement limit from Rs 1 lakh to Rs 5 lakh, so that a large chunk of claims can be processed in a shorter period without manual intervention.
To ensure that these timelines are met, the Ministry of Labour and Employment has introduced a rigorous accountability framework. Under the newly notified EPF scheme, officials who are responsible for an ‘unjustifiable delay’ of more than 20 days will face personal financial consequences.
The framework mandates a 12 per cent per annum penal interest on the benefit amount, which is to be deducted directly from the salary of the official responsible for the delay.
For instance, if a Commissioner fails to settle a claim that is complete in all respects within the 20-day window without a justifiable reason, they will be held liable for the delay.
Contrary to the previous system under which the officials were required to pay the declared rate of interest on PF deposits, the new system sets the penal interest rate at a fixed 12 per cent for delay in settlement of claims completed in all respects.
This reform is part of the transition of the old EPF Act to the new Code on Social Security. On June 29, 2026, EPFO notified three new schemes: the Employees’ Provident Funds (EPF) Scheme, 2026, the Employees' Pension Scheme (EPS), 2026, and the Employees’ Deposit-Linked Insurance (EDLI) Scheme, 2026.
These 2026 schemes replace the legacy framework of the 1952, 1971, 1995, and 1976 schemes. While there are some structural changes in the scheme, like the claim settlement, rules related to contribution remain the same. Both employer and employee will need to contribute at least 12 per cent of the basic salary towards EPF.
The core objective of these measures is to provide faster access to savings in case of unexpected, but essential life events, such as medical emergencies, education, housing, wedding, or unemployment. By automating the process, the EPFO expects to significantly reduce the claim rejection rates and improve user experience.
Notably, its EPFO member and employer portal and UMANG app have been down for the past seven days due to system upgradation. They were restored on July 3, 2026, after a couple of extensions.
