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In a relief to claimants of the Rs 27,000-crore of inactive funds with the Employees Provident Fund Organisation (EPFO), the Union government has decided to credit interest on claims if the settlement takes more than 30 days.
The move will ensure salaried employees whose accounts have become inoperative in EPFO still get the benefit of the interest rate on the funds. It is mandatory for the retirement body to settle claims and payments of EPFO subscribers within 30 days. At present, EPFO gives 8.75 per cent.
If a subscriber doesn’t make a contribution to his or her account for more than three years continuously, it is termed inoperative. As of March 31, as much as Rs 27,448 crore was in such inoperative accounts.
The latest notification was made on December 12, for interest to be credited to such an account for the delay period, excluding the initial one of 30 days. For, it was found that EPFO was taking beyond 30 days to settle such claims, since there is multi-level verification.
Earlier, the Union government had stopped crediting interest rates in inoperative accounts of EPF subscribers from April 1, 2011. That meant if the employee under EPFO had not withdrawn or transferred his or her funds after switching a job for 36 months, no interest would be credited to the account from the 37th month.
According to the present norm for settling such accounts, the employer has to attest the employee's claim form. If the employer fails to identify the member, the claim has to be attested by bank authorities, along with verification of a know-your-customer document.
Where the settlement amount is beyond Rs 50,000, the claims are approved by an assistant PF commissioner. For below Rs 50,000, approval is by an accounts officer.
The inoperative accounts have definite claimants and the amount lying in the inoperative account cannot be utilised for any other schemes except for the settlement of the members' account.
"The members after switching over from one covered establishment to another do not get the funds transferred to their present account. As a result, the old account becomes inoperative after 36 months," union labour minister Bandaru Dattatreya had said in a written reply to the Lok Sabha on December 1 this year. Dattatreya also said that the interest earned on the deposits with EPFO is exempted from Income Tax. Therefore, there exists a tendency of leaving the balance amount with EPFO.
