KKN Gurugram Desk | In a significant move aimed at providing quick access to funds for members facing urgent financial needs, the Employees’ Provident Fund Organisation (EPFO) has increased the advance settlement limit under its auto-settlement mode from ₹1 lakh to ₹5 lakh. This step is designed to help EPFO members access emergency funds more efficiently and with minimal delay.

EPFO’s Decision to Raise Advance Settlement Limit

On June 24, 2025, the Union Minister for Labour and Employment, Mansukh Mandaviya, announced the EPFO’s decision to enhance the limit for auto-settlement claims. Previously, under the auto-settlement facility, EPFO members were allowed to withdraw only up to ₹1 lakh in advance from their EPF (Employees’ Provident Fund) accounts. Now, this limit has been increased to ₹5 lakh, providing a substantial boost to individuals needing urgent financial assistance.

According to the Ministry, the increase in the advance settlement limit is aimed at ensuring that EPFO members have quick access to funds during critical situations, such as medical emergencies, education, marriage, or even purchasing a home. The announcement is expected to benefit millions of EPFO members, who number over 7 crore in total.

Why the Increase in Settlement Limit?

The increase in the auto-settlement advance limit comes as part of EPFO’s ongoing reform efforts to improve the efficiency and accessibility of its services. The government acknowledges that the financial needs of individuals often arise unexpectedly, and the ability to quickly withdraw funds is essential.

With the rise in the number of EPFO members and the growing demand for efficient processing of advance claims, the EPFO has made this decision to meet the evolving needs of its members. The enhanced limit aims to ensure that members can access larger sums of money in cases of urgent financial requirements, without facing bureaucratic delays.

Key Features of EPFO’s Auto-Settlement Mode

The auto-settlement mode for advance claims was initially introduced during the COVID-19 pandemic to provide immediate financial relief to employees. This system was put in place to help EPFO members navigate the financial crisis that many were facing due to the economic impact of the pandemic.

After its initial success, the auto-settlement facility was expanded to cover a variety of needs, such as:

• Medical emergencies

• Education-related expenses

• Marriage expenses

• Home purchase

One of the standout features of the auto-settlement process is its ability to settle claims quickly and transparently, without the need for human intervention. This system automates the entire process, ensuring a faster and more efficient settlement of claims.

Growth in Auto-Settlement Claims

The data speaks for itself. In the 2024-25 financial year, EPFO settled a record 2.34 crore claims via auto-settlement, which is an increase of 161% compared to the 89.52 lakh claims settled in the previous year, 2023-24. This substantial increase in claims settled through auto-settlement reflects the growing trust in the system and the demand for quicker services.

In 2023-24, 31% of the advance claims were processed through the auto-settlement mode. By 2024-25, this figure surged to 59%, highlighting the growing preference for digital and automated systems. In the initial months of the 2025-26 financial year, EPFO has already settled 76.52 lakh claims, which accounts for 70% of all advance claims.

EPFO’s Commitment to Quick and Efficient Service

The significant increase in the number of claims processed through the auto-settlement mode is a testament to EPFO’s commitment to delivering quick and effective services to its members. According to Mansukh Mandaviya, the improved speed of claim settlements is a direct result of ongoing reforms within the EPFO, aimed at enhancing service delivery.

These reforms are not only reducing the time taken for the settlement of claims but have also led to a reduction in the number of complaints from members. The smooth, automated process has made it easier for members to access their funds, ensuring that they face fewer obstacles in times of financial need.

How the System Works

The auto-settlement system works by automating the process of claim approval and payment. When an EPFO member applies for an advance under the new system, their claim is processed through an automated system, and once approved, the payment is directly credited to the member’s bank account. The EPFO guarantees that these claims will be settled within three days, providing much-needed relief for members during times of financial distress.

For the auto-settlement to take place, the member must meet certain eligibility criteria, such as having a sufficient balance in their EPF account and a valid reason for requesting the advance. The process has been designed to ensure that members don’t have to go through cumbersome paperwork or wait for long periods to access their funds.

Impact of EPFO’s Reforms on Members

The ongoing reforms in the EPFO system have significantly impacted its members by improving the efficiency and accessibility of their retirement savings. The auto-settlement of claims is a major step forward, as it allows members to access their funds quickly, without having to wait for extended periods.

This move to increase the advance withdrawal limit to ₹5 lakh is especially important in today’s fast-paced world, where financial emergencies can arise at any time. The EPFO’s efforts to make it easier for members to access funds not only make them more secure but also help reduce the stress and uncertainty that comes with emergency financial needs.

What’s Next for EPFO?

As part of the EPFO’s ongoing modernization efforts, members can expect more digital solutions and improved services in the coming years. The focus on streamlining claims processes, improving member engagement, and enhancing customer service reflects the government’s commitment to empowering workers with easier access to their hard-earned money.

EPFO’s ability to address both the financial security and urgent financial needs of its members will be pivotal in enhancing the overall effectiveness of the system. As more people look to digital solutions for financial services, the EPFO’s role will continue to evolve, ensuring that the retirement savings of millions of workers are better managed and more accessible.

In conclusion, the EPFO’s decision to raise the advance settlement limit to ₹5 lakh and improve the auto-settlement process represents a significant step forward in the digital transformation of the organization. This move will not only provide members with greater financial flexibility but also enhance their overall experience with EPFO services.

By continuing to streamline the process of claiming advances, EPFO is setting an example for other institutions to follow. These changes will undoubtedly have a positive impact on millions of working individuals who rely on EPF for their retirement savings and emergency financial needs.