Economy

Inoperative employees’ provident fund accounts yet to earn interest credits

Protests erupted in Bengaluru against EPF rule changes. Unions will raise the credits issue soon. — FILE PHOTO  

The Centre is yet to notify changes in the inoperative Employees’ Provident Fund (EPF) accounts to allow depositors to earn interest credits from this year.

“The decision was approved by the Central Board of Trustees (CBT) which is a recommendatory body,” a senior EPFO official said on condition of anonymity. “We have already referred the proposal to the ministry which will have to notify it.” Since 2011, interest was not credited to accounts that hadn’t received any fresh contributions for three consecutive years, known as inoperative EPF accounts.

Contradictory stance

Both EPFO and Labour Ministry officials took a contradictory stance on the status of the notification.

“We haven’t received a formal proposal from the EPFO related to the decision taken by its central board of trustees (headed by the labour minister) in March. We will examine it only after we get a proposal,” said a senior labour ministry official.

On March 29, the government scrapped a decision taken by the previous United Progressive Alliance government to suspend interest credits on inoperative Employees’ Provident Fund (EPF) accounts, in the absence of any fresh contributions in these accounts for three years. At present, 9.23 crore out of total 15 crore EPF accounts are inoperative with around Rs. 44,000 crore deposits in them.

The government needs to amend the EPF Scheme of 1952 to allow crediting interest in inoperative accounts. “At present, there is no proposal under consideration of the government to amend paragraph 60 (6) of the EPF Scheme, 1952,” Labour Minister Bandaru Dattatreya said last week.

Rule review

The EPFO initiated a review of the rules related to inoperative accounts following a February 10 notification that barred employees from withdrawing their entire PF balance till they reach the age of 58 years even if they have lost their job or left the EPF net. Since the employees’ share was kept with the EPFO, it felt that interest should be credited to such accounts. However, the notification was scrapped after strong protests from workers across the country.

The EPFO official said it has proposed changes to the definition of an inoperative account to ensure EPF accounts continue to get interest credits for three years after members reach the age of 58 years. “This will come into effect from April 1, 2016,” the official added.

Central trade unions said they will raise the matter in the next CBT meeting scheduled to be held on July 26. “We will definitely take up the matter in the next CBT meeting,” said Ramen Pandey of Indian National Trade Union Congress.

“There is no reason why the beneficiaries should not get money credited to the account when their money is invested somewhere by the EPFO to get returns. The government should act immediately.”


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Printable version | Jan 28, 2022 6:17:02 PM | https://www.thehindu.com/business/Economy/Inoperative-employees%E2%80%99-provident-fund-accounts-yet-to-earn-interest-credits/article14506260.ece

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