Central provident fund commissioner K K Jalan wants a policy on inoperative accounts in the Employees Provident Fund Organisation (EPFO).
He told Business Standard, "In every pension fund body, some amount always remains unclaimed. There should be a policy on that.”
EPFO had Rs 26,497 crore in “inoperative accounts” as of March 2013, minister of state for labour and employment Vishnu Deo Sai said in a written reply in the Lok Sabha recently. Jalan cited international practices, such as the one followed in Malaysia where the pension funds go into a separate government account if it is unclaimed till 80 years of age of a citizen.
“The unclaimed funds there are parked in a separate government account and hence the cash goes to the government. That means this will become public exchequer money and no longer be a part of the pension funds. So, at the time of claiming, the person can go to the government,” Jalan said.
In Malaysia, after a person reaches 80 years, the contributions get transferred to the Registrar of Unclaimed Moneys, required under the Employees Provident Fund Act of 1991 in that country.
Finance Minister Arun Jaitley has already announced a committee to look into utilisation of unclaimed funds in various bodies like the public provident fund (PPF) and post office savings schemes. In his Budget speech, he'd said the committee would give its report by December. on how the money in these accounts can be utilised to protest the “financial interest of senior citizens”.
Experts welcomed this move. “If a person dies, the family may never know that the deceased even had a PPF account, so the funds become inoperative. There might also be cases where there is no nomination as well,” said a senior analyst from Deloitte Haskins & Sells.
However, inoperative funds in the EPFO do not get classifies as unclaimed. EPFO says there are “definite claimants” and the amount “cannot be utilised for any other schemes except for the settlement of the members’ account", Sai had said in the reply. Jalan said introduction of the double-entry accounting system will help EPFO identify the inoperative account balances in a more efficient manner.
“The pilot of double-entry accounting will begin this year and might be launched by next year,” he said.
Under this system, the assets and liabilities of a firm are specifically available, unlike in the single-entry system.