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EPFO Members Alert! You May Not Get Interest On Your Provident Fund Deposits If This Happens
If you are a member of the Employees’ Provident Fund Organisation (EPFO), then you must be aware that the organisation is giving 8.25% return on your deposits. However, the EPFO has recently clarified changes for its member's and beneficiaries' accounts. To guarantee that funds intended for beneficiaries are distributed to the appropriate recipients, the Employees’ Provident Fund Organisation (EPFO) has introduced new guidelines concerning the transfer and withdrawal of funds from accounts that have had no transactions or are inactive.
New Provident Fund Transfer, Withdrawal Rules
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The Employees’ Provident Fund Organisation (EPFO) has introduced new guidelines to ensure that funds designated for beneficiaries are correctly disbursed to the rightful claimants. These guidelines address the transfer and withdrawal of funds from accounts that have been inactive or have had no transactions.
Verification Mechanism
The EPFO has identified certain provident fund accounts with long periods of inactivity. To prevent potential fraud, impersonation, and forgery, a preemptive verification mechanism is necessary when withdrawing funds from these accounts. This was outlined in a circular issued on August 2.
Unauthorized Payments
The primary goal is to safeguard the capital in these accounts from unauthorized payments. To achieve this, the EPFO will implement robust processes such as biometric authentication and regular KYC updates.
Inoperative Accounts
According to paragraph 72(6) of the EPF Scheme, some accounts are classified as ‘inoperative accounts’. These accounts stop earning interest, highlighting the need for thorough verification.
Definition of Inoperative Accounts
Under the amended definition, an account becomes inoperative after the account holder reaches the age of 58, which is 36 months after the retirement age of 55. According to paragraph 60(6) of the EPF Scheme, 1952, interest is not credited to inoperative accounts. However, interest will be credited until the member turns 58.
Transaction-less Accounts
Transaction-less accounts are those that have no activity other than the periodic interest credited over three years. These accounts are considered inactive due to the lack of transactions in the past three years.
Additional Due Diligence
The EPFO stated that transactionless accounts will require more due diligence. Moreover, the current claim settlement and verification procedures for these accounts must be revised to ensure greater scrutiny during processing and settlement. This involves a thorough reassessment of existing practices to incorporate updated protocols, leveraging digital technologies to enhance efficiency within the evolving framework of the EPFO.
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