If you are worried about your old employees provident fund (EPF) account that has stopped giving you any returns and you couldn't withdraw the amount or get the funds transferred to an active account, here's a piece of good news. The Employees Provident Fund Organisation (EPFO) is coming up with an online fund transfer scheme that would make it easy for crores of EPF account holders.
With six out of 10 EPF accounts inactive and a whopping R23,000 crore lying unclaimed in these 6 crore dormant accounts, the EPF is rolling out the new transfer system before Diwali to help a majority of its subscribers to either withdraw or move their savings to active accounts, central provident fund commissioner KK Jalan told FE on Friday.
This is how it works: the application filed by a subscriber on the EPFO portal for withdrawal (in case of job loss) or transfer (in case of job switch) of EPF funds will automatically go to the employer and the EPFO.
This would ensure that neither the employer nor the EPFO can claim that they have not received the application, a guarantee against undue delays.
The transaction will be completed within a few days. The EPFO hopes that with this, half of the fund transfers will go paperless by next year.
The proposed move could bring cheer to millions of subscribers, especially migrant workers and job-hoppers, whose applications are caught up in EPFO's multi-layered bureaucratic cobweb.
The new system would incentivise those who have been keeping away from claiming their previous EPF accounts fearing bureaucratic red-tape.
The dormant accounts are those that haven't seen any accruals for the last three years.
Since April 2011, these accounts have not been generating any interest income for the subscribers while being a drag on the books of the EPFO.
Unlike in insurance sector where the funds in inoperative accounts can be used for investor education, the EPF Act bars the provident fund to use the funds lying in "inoperative" accounts for any productive purposes.
Jalan said EPFO has a little over 10 crore subscribers right now but contributions are made regularly in about 4 crore accounts only.
Though the subscriber base of EPFO has more than doubled from 4.5 crore as on March 2008 to over 10 crore now, EPFO officials said many employees are having more than one