In a landmark proposal aimed at strengthening India’s social security framework, the Employees’ Provident Fund Organisation (EPFO) has announced plans to retain pension fund accounts for up to three years after a member exits employment. This move, revealed by EPFO Commissioner Salil Sankar, ensures that if a former employee passes away within this period, their spouse and children will remain eligible for pension benefits.
A Shift in Pension Policy
Under current EPFO rules, members who exit service before completing ten years—classified as non-pensionable—lose all future pension entitlements upon withdrawal of their funds. This has left many families vulnerable, especially in cases where workers die shortly after leaving employment.
Commissioner Sankar highlighted the urgency of reform:
“In several cases, we have seen workers withdraw small pension fund amounts and die within a year or two, leaving their dependents without any support. The new system ensures that their families will not be left destitute,” he said.
Key Features of the Proposal
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Retention of pension accounts for 3 years post-exit
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Eligibility for family pension if the member dies within this window
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Applies even to non-pensionable members with less than 10 years of service
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Aims to provide continued social protection for dependents
This reform is expected to benefit workers in high-churn sectors such as retail, logistics, and contract staffing, where early exits are common and pension eligibility is often forfeited.
Broader Pension Reforms
The proposal follows recent EPFO updates that allow pension payouts even for employees with less than six months of service, provided they have completed at least one month of contributory service. These changes reflect EPFO’s evolving stance on inclusive and flexible pension coverage.
Social Impact
If implemented, the new rule could significantly reduce financial distress among families of former workers, especially those who exit employment due to health issues, layoffs, or informal sector transitions. It also reinforces EPFO’s commitment to long-term social protection, even beyond active employment.
