When an EPF member dies in service, the Employees' Deposit-Linked Insurance Scheme 2026 pays the family a lump sum on top of the PF balance. A member with twelve months' continuous employment gets 35 times their average monthly wages plus half their average PF balance, never less than ₹2.5 lakh or more than ₹7 lakh. Anyone else gets up to ₹1 lakh, with a ₹50,000 minimum. Contract workers are covered on the same terms.
Who is covered, and who pays for it
Every EPF member is covered, and only the employer pays. The 2026 Scheme, notified as G.S.R. 526(E) on 29 June 2026, replaced the 1976 scheme and applies to the employees of every establishment under Chapter III of the Code on Social Security 2020 (para 1(3)). A member of the EPF Scheme 2026 is a member of this one (para 2(1)(e)), so a contract worker enrolled in EPF needs no separate enrolment for the insurance.
- No worker contribution. The employer pays on Code wages up to the wage ceiling (para 5(1)) and may not deduct it from wages or recover it from the worker in any other way (para 8).
- Contract workers are the employer's to fund. Paragraph 6(2) makes the employer responsible for the contribution for employees "employed by or through a contractor", paid electronically within fifteen days of the close of each month (para 6(1)). Late payment attracts damages at the EPF Scheme's rates (para 7).
- The rate is set by notification. The Scheme no longer fixes a percentage. The Central Government notifies it after actuarial valuation (para 5(2)), within the Code's limit of 1% of wages unless another rate is notified, plus administrative charges of up to a quarter of the contribution (s.16(1)(c) and proviso) [VERIFY: the rate currently notified; the 1976 scheme charged 0.5% of wages, and no 2026 notification was found].
The two formulas
Paragraph 21 has two routes, and the twelve-month test decides which applies. A member who meets it receives whichever of the two formulas pays more.
| Route | Who qualifies | Amount | Limits |
|---|---|---|---|
| Wage-linked (para 21(4)) | Continuous employment for the twelve months before the month of death | 35 × average monthly wages over those twelve months, plus 50% of the average PF balance over the same period | Wages capped at the notified wage ceiling; the balance-linked part capped at ₹1,75,000; total not less than ₹2,50,000 and not more than ₹7,00,000 |
| Balance-linked (para 21(1)) | Any member who dies in service, whatever their length of membership | The average PF balance over the previous twelve months or the membership period, whichever is shorter. Above ₹50,000: ₹50,000 plus 40% of the excess | Not more than ₹1,00,000; not less than ₹50,000 (para 21(2)) |
Two details change the numbers. The "average balance" counts the employer's and employee's contributions due for the period, whether paid or unpaid, with interest (Explanation 1 to para 21). Paragraph 21(5) then adds 20% to the benefit under sub-paragraphs (1) or (3), the balance-linked route [VERIFY: whether EPFO applies the uplift to the ₹50,000 minimum, and whether it reaches the wage-linked amount under sub-paragraph (4); the text names only (1) and (3)].
The wage ceiling moved during 2026. The EPF wage ceiling rose from ₹15,000 to ₹25,000 a month from 17 September 2026 (S.O. 5109(E)), so a member's wage-linked amount can now be worked out on up to ₹25,000. At 35 times, average wages of ₹20,000 alone reach the ₹7 lakh maximum. For a death in the first year after the change, the twelve months being averaged straddle both ceilings [VERIFY: how EPFO caps each month's wages for those deaths].
Worked examples
Each row assumes a member who dies in service, with the averages taken over the twelve months before the month of death.
| Member | Working | Assurance benefit |
|---|---|---|
| 12+ months' service, average wages ₹14,000, average PF balance ₹60,000 | 35 × ₹14,000 = ₹4,90,000, plus 50% × ₹60,000 = ₹30,000 | ₹5,20,000 |
| 12+ months' service, average wages ₹10,000, average balance ₹20,000 | ₹3,50,000 + ₹10,000 | ₹3,60,000 |
| 12+ months' service, average wages ₹6,000, average balance ₹12,000 | ₹2,10,000 + ₹6,000 = ₹2,16,000, below the floor | ₹2,50,000 (the minimum) |
| A full year on the ₹25,000 ceiling, average wages ₹22,000, average balance ₹1,20,000 | ₹7,70,000 + ₹60,000 = ₹8,30,000, above the cap | ₹7,00,000 (the maximum) |
| Five months' membership, average balance ₹15,000 | Balance-linked route: ₹15,000, below the minimum | ₹50,000, plus any 20% uplift under para 21(5) [VERIFY] |
The gap between the third and fifth rows is the twelve-month test. A worker on modest wages who qualifies gets at least ₹2.5 lakh; one who falls short gets as little as ₹50,000. For a contract workforce that changes contractors, how the twelve months are counted matters more than the wage.
How twelve months are counted for a contract worker
Service with more than one employer counts, and a short gap does not break it. The proviso to paragraph 21(4) says that, for the twelve-month test, a gap of sixty days between two spells of employment is ignored and the multiple services are added together and treated as continuous. A contract worker who moves from one contractor to the next, or between sites, keeps the qualifying period as long as the break is no longer than sixty days.
- The UAN is what proves continuity. Service adds up only if it sits on the same member record. A worker given a fresh UAN by a new contractor has two short histories instead of one long one, and the family may have to prove the link at the worst possible time.
- The twelve months are counted backwards from the month before the month of death (Explanation 2 to para 21).
- A worker off the floor is still covered for six months. A member who dies within six months of the last contribution received, while still on the employer's rolls, gets the assurance benefit (para 21(6)). Long sick leave or a period without wages does not on its own end the cover.
- A contractor's default does not shrink the benefit. Because the average balance counts contributions due "whether paid or unpaid", unremitted PF is still in the calculation. The default becomes a recovery against the employer, with damages, and under paragraph 20(4) of the EPF Scheme 2026 the principal employer stays responsible for the contributions of workers engaged through a contractor.
Whether a particular service history meets the twelve-month test is decided by the EPFO on the member's record. Where an employer's liability for unpaid contributions is in question, that is a matter for the site's own counsel.
Who claims, and how fast
The PF nominee claims, and a complete claim must be settled within twenty days. Paragraph 22 treats the nomination made under paragraph 46 of the EPF Scheme 2026 as the nomination for this Scheme. If there is no nomination, or it covers only part of the account, the uncovered part goes to the member's family in equal shares, and failing them to whoever is legally entitled. A claimant charged with the member's murder or its abetment has their share suspended until the trial ends (para 22(4)–(5)).
- The claim is filed with the Commissioner in the form the Central Provident Fund Commissioner specifies, online or offline (para 23(1)), and paid by electronic transfer to a bank or post office account (para 23(2)).
- Twenty days to settle. A claim complete in all respects is settled and paid within twenty days of receipt (para 23(3)); a deficient one must have its deficiency recorded and communicated within the same twenty days (para 23(4)).
- Delay costs the Commissioner, not the family. If a complete claim is not settled in twenty days without sufficient cause, penal interest at 12% a year may be charged on the benefit and deducted from the Commissioner's salary (para 23(5)).
- Some payments need no claim. The Central Board may authorise payment to the nominee or beneficiary without a claim, up to a ceiling it sets (para 23(6)).
A death before the 2026 Scheme came into force is still paid on the 1976 scheme's terms, even if the claim arrives later (para 26). The employer's part of any claim is the record: the last date on the rolls, twelve months of wages and the contributions due for them. For a contract worker, that record sits with the contractor's payroll and the site's own Form XI and ECR copies.
How Velura Services helps
We file each worker's e-nomination against their UAN at onboarding and carry the same UAN across contractor changes, so service is not broken on paper. If a deployed worker dies, our payroll team confirms the twelve-month wage and contribution record, completes the employer's part of the claim, and helps the family file it with the EPFO.
Sources
- Employees' Deposit-Linked Insurance Scheme, 2026, G.S.R. 526(E) dated 29 June 2026, mirrored copy of the Gazette of India Extraordinary. Paragraphs cited: 1(3), 2(1)(e), 5, 6, 7, 8, 21(1)–(6) with Explanations, 22, 23 and 26. Opened and read [VERIFY: against the e-Gazette original].
- Employees' Provident Funds Scheme, 2026, G.S.R. 525(E) dated 29 June 2026, mirrored copy of the Gazette. Paragraphs cited: 20(4) (principal employer responsible for contract workers' contributions) and 46 (nomination). Opened and read for earlier articles in this cluster [VERIFY: against the e-Gazette original].
- Code on Social Security, 2020 (Act 36 of 2020), Gazette text hosted by the Ministry of Labour and Employment. Sections cited: s.2(88) (wages), s.2(89) (wage ceiling), s.15(1)(c) (power to frame the insurance scheme), s.16(1)(c) (employer's insurance contribution). Opened and read.
- PIB Kolkata, "EPFO Raises Wage Ceiling from Rs. 15,000 to Rs. 25,000; Over 51 Lakh Workers to Benefit", Release ID 2313829, 23 September 2026. S.O. 5109(E), effective 17 September 2026. Opened and read for earlier articles in this cluster [VERIFY: Gazette text of S.O. 5109(E) not opened].