Key Takeaways from Lok Sabha on EPFO Reforms and Health Insurance Premium Hikes

Financial Report: Key Takeaways from Lok Sabha Discussion

EPFO 3.0 Reforms

The government has implemented EPFO 3.0, a reform aimed at simplifying provident fund services and speeding up claim settlements. The Centralised Pension Payment System (CPPS), launched in January 2025, enables faster pension disbursement to over 70 lakh pensioners through any scheduled bank branch. The auto-claim settlement limit has been raised from Rs 1 lakh to Rs 5 lakh, and over 3.52 crore claims have been processed digitally so far this financial year.

Employees' Pension Scheme (EPS-95)

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The minimum pension under EPS-95 continues at Rs 1,000 per month, supported through budgetary assistance. The scheme is funded through 8.33% employer contribution and 1.16% contribution from the central government on wages up to Rs 15,000. As of March 2026, over 99.2% of applications for higher pensions have been processed.

Tax Exemption on Disability Pension

The government has retained income tax exemption on disability pensions for armed forces personnel invalided out of service under the Income-tax Act, 2025. The exemption applies to personnel whose disabilities are attributable to or aggravated by military service and who are invalided out of service.

Health Insurance Premiums

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The government has informed the Lok Sabha that health insurance premiums may increase due to several factors, including ageing policyholders, higher coverage or sum insured, and the addition of new policy features or benefits. The IRDAI requires insurers' appointed actuaries to periodically review premium revisions based on risk experience.

Asset Valuation and Loan Recovery

The government has introduced stricter norms for valuing mortgaged assets before loan approvals, including independent valuation and title checks. Borrowers appealing before DRAT must deposit part of the outstanding debt. The government has also introduced mandatory e-auctions, digital case filing, and the BAANKNET platform to improve transparency and strengthen Debt Recovery Tribunals.

Bank Locker Safety

The government has informed Parliament that 40 instances of valuables going missing from bank lockers in public sector banks were reported between FY21 and FY25, with compensation of about Rs 5.93 crore paid to affected customers. The RBI has issued revised bank locker guidelines to improve safety, and banks are required to maintain insurance and robust security systems to protect locker contents.