After launching an online passbook facility for subscribers, the Employees’ Provident Fund Organisation is now planning to roll out a number portability system that will make the ‘Aadhaar’ card number a permanent EPF account number for an employee throughout his career.
Besides curbing manipulation by unscrupulous companies, the move will eliminate the hassle of transferring funds to a new account number every time a person switches jobs and help accumulate EPF contributions for a longer time. “A lot of manipulation has happened with companies not depositing money towards the PF contribution of their casual workers. The e-passbook scheme is a major reform as it brings transparency. The second step of reform will be making one account number permanent—it will remain same even if an employee changes jobs,” central provident fund commissioner RC Mishra told reporters.
“It will be like the one in New Pension Scheme,” he said. At present, EPF has close to 12 crore accounts of which 4.5 crore are operative, he said. This means many workers have neither transferred their funds from previous accounts to new accounts, nor made withdrawal claims.
Number portability is all the more necessary for contract workers, many of whom are not enrolled in the EPF due to the migratory nature of their jobs, Mishra said. “For example, there are 4-5 crore construction workers not getting this (EPF) benefit.”
At the end of March 2011, EPFO was managing a corpus of R4.66 lakh crore under three schemes—employees’ provident fund (EPF), employees pension scheme (EPS) and employees deposit-linked insurance (EDLI)—for 6.16 crore subscribers. Despite enjoying a virtual monopoly, EPFO is now facing competition as investors are lured by higher returns offered by the New Pension System, banks and even post office schemes.
NPS is being increasingly preferred by corporates and new generation workers for its portability and tax benefits. Portability has helped employees to switch jobs and keep their retirement contributions intact while cutting down the compliance cost for companies.
The EPFO has been debating on the unique account number for quite some time. At one time, it wanted to make the Permanent Account Number (PAN) issued by the finance