EPFO 3.0 rollout, pension updates and insurance costs: What govt said in Lok Sabha

The government on March 16 outlined a series of updates on EPFO reforms, pension payouts and rising insurance costs during Question Hour in the Lok Sabha, with implications for millions of salaried workers and taxpayers, Moneycontrol reported.

Officials said the rollout of EPFO 3.0 is aimed at simplifying provident fund services and speeding up claim settlements, as part of broader efforts to digitise and streamline the system.

Under the reforms, the Centralised Pension Payment System (CPPS), launched in January 2025, now enables pension disbursement to over 70 lakh beneficiaries through any scheduled bank branch. The government also raised the auto-claim settlement limit from Rs 1 lakh to Rs 5 lakh and processed more than 3.52 crore claims digitally in the current financial year.

In addition, the system has simplified account transfers during job changes, triggering over 70 lakh automatic PF transfers, according to the government’s response in Parliament.

On pensions, the Centre said the minimum monthly payout under the Employees’ Pension Scheme (EPS-95) remains Rs 1,000, supported through budgetary assistance. It added that over 99% of applications for higher pension options have been processed so far.

The government also confirmed that income tax exemption on disability pensions for armed forces personnel continues under the current tax framework, maintaining earlier provisions.

On health insurance, the Finance Ministry told the Lok Sabha that rising premiums are driven by multiple factors beyond medical inflation. These include ageing policyholders, higher coverage levels and additional policy features. The insurance regulator requires periodic actuarial reviews, while annual premium increases for senior citizens are capped at 10% unless prior approval is obtained.

Separately, the government said it is tightening norms around asset valuation and loan recovery, mandating stricter checks on collateral valuation and introducing measures such as e-auctions and digital case filings to improve transparency in Debt Recovery Tribunals.

It also disclosed that 40 cases of missing valuables in public sector bank lockers were reported over the past five years, with compensation of about Rs 5.93 crore paid to customers. Revised RBI guidelines now require stronger security and insurance coverage for locker facilities.

The updates signal a continued push towards digitisation, tighter financial oversight and improved service delivery, even as concerns around insurance affordability and pension adequacy remain under scrutiny.