The EPFO has progressively raised the (digitally processed) auto-settlement claim limit up to ₹5 lakh.

But as claim settlement went digital, a new set of problems emerged: the know your customer (KYC) verification process, which enables automated processing, has itself become a source of challenges for some members.

KYC Under EPFO 3.0

KYC verification has become a critical component of EPFO 3.0, under which the auto-settlement claim limit was increased significantly from ₹1 lakh to ₹5 lakh in 2025, with the turnaround time set for three days. 

According to the EPFO, around 84% of claim settlements are in the auto-settlement process.

Yet, about 40%–45% of the grievances received pertain to the non-settlement of PF claims. 

The EPFO receives grievances from various sources such as the Centralised Public Grievance Redress and Monitoring System (CPGRAMS), emails, social media platforms, and physical forms. EPFO's dedicated customer service division addresses the grievances on a top priority basis.

Digital Awareness

Officials attribute the issue of non-settlement of claims primarily to incomplete KYC updation, while labour unions point to a deeper, structural issue: limited digital awareness among a section of PF claimants.

Speaking to The Secretariat, Pankaj, Additional Central P.F. Commissioner (HQ)/Country Head of EPFO's Publicity and Communication Division, highlighted that the EPFO serves a vast section of society. “So, the members may often miss major data points when filing their claims. As a result, their claims may get rejected. We have put in place the auto-claim settlement process to circumvent this issue and enable timely settlement. Once the KYC verification is completed, there wouldn’t be any need for the intervention of any departmental officer or staff [for claims up to ₹5 lakh],” he said, adding that the completion of KYC will remove the need for manual intervention in claims settlement.

We have put in place the auto-claim process for timely settlement

– Pankaj, Additional Central P.F. Commissioner (HQ), EPFO

One may also ponder what share of unsettled claims is attributable to inoperative accounts. However, officials clarify that they rarely receive claims on inoperative accounts.

As per data provided by the EPFO, inoperative accounts constitute less than 1% of total accounts, translating to about 31 lakh accounts. Of these, 7 lakh have balances of less than ₹1,000. Over ₹9,300 crore belonging to employees remains unclaimed in these inoperative accounts.

“About 7 lakh accounts have an amount balance that is less than ₹1,000; probably this is the reason they might not have applied for the claim settlement,” Pankaj said, pointing out that the EPFo now plans to obtain the bank account number [of such inoperative accounts] from the NPCI [National Payments Corporation of India]. “Wherever the KYC has been done, we will settle the claim on our own,” he said.

A Different Concern

Labour unions point to a deeper structural issue that is undermining the digital transition: limited digital awareness and resources among a section of PF claimants.

“Before completely transitioning to technology-based modes, we must ensure that technology reaches the people in the first place,” R. Chandrasekaran, National Vice President, Indian National Trade Union Congress (INTUC), said.

“We are still in the ‘transition phase’ from traditional PF withdrawal methods to fully automated and digital modes. We have been historically following traditional modes for PF claims,” Chandrasekharan told The Secretariat.

Before completely transitioning to technology-based modes, we must ensure that technology reaches the people in the first place

– R. Chandrasekaran, National Vice President, INTUC

“When we refer to KYC verification, it is not so simple,” Chandrasekaran further said. 

EPFO's Nidhi Aapke Nikat 2.0: Grassroots Outreach

On the issue of digital literacy, the EPFO official highlighted that various grassroots-level initiatives have been undertaken to amplify outreach.

“Several awareness programmes are being conducted to familiarise people with the functioning of the EPFO,” Pankaj said, referring to the Nidhi Aapke Nikat (now NAN 2.0) – the flagship outreach scheme conducted by the retirement fund body on the 27th of every month to resolve member grievances on the spot.

“Earlier, people used to come to the office [EPFO] to submit their grievances. Now it is the other way round: the EPFO authorities will go to the people… reach their doorstep. So, roughly 650 to 700 camps are conducted on the 27th of every month [as part of the NAN scheme],” Pankaj underscored.

When Employer Steps In

In cases where KYC has not been updated, the employer comes into the picture, as a joint declaration is required from the employer and the employee for fund withdrawal. “When the KYC is not updated, the employer serves as a medium between the employee and the EPFO. In cases where KYC [updation] has been done, there is no need for the employer’s intervention, as the member themselves can upload the claim online through the portal. But in cases where KYC has not been done, then the employer comes into the picture,” Pankaj said.