EPFO: Big news for PF Account holders.The Rs 30.52 crore tied up in 7.11 lakh inactive accounts of the Employees’ Provident Fund Organisation (EPFO) will soon be returned to the respective account holders or their legal heirs. This decision by the Labour Ministry is part of an initiative to close 31.86 lakh such accounts that are currently inactive. According to the ministry, some of these accounts are as old as 20 years, with no transactions occurring for three years.
The ministry announced that as a pilot project to close dormant accounts, 700,000 accounts have been chosen, with deposits ranging from zero to Rs 1,000 and linked to Aadhaar. The EPFO will directly transfer the funds to these accounts. These accounts contain Rs 30.52 crore. If the pilot project proves successful, the remaining accounts will be refunded in a similar fashion.
The Provident Fund is a mandatory government scheme for private sector employees. Each employee contributes 12% of their basic salary, while the employer matches that contribution. However, if an account remains untransferred for three years, it is classified as dormant. The Ministry of Labor is now taking steps to close such accounts.
Total deposits of Rs 10,903 crore
There are approximately 31.86 lakh inactive PF accounts in EPFO, holding a total of Rs 10,903 crore. According to the government, EPFO members can now easily claim their money. However, it has been observed that members often leave accounts with smaller amounts untouched to avoid the hassle of withdrawing them.
Small amounts pose a significant issue
Small PF amounts are a considerable problem, as they result in thousands of crores of rupees being stuck in inactive accounts. People are reluctant to withdraw these small sums, and the ministry is held accountable for the funds. This situation is also impacting official guidelines and timely work plans.
Whose account will receive the unclaimed PF money?
The EPFO currently has approximately 31.86 lakh inoperative accounts with deposits of Rs 10,903 crore. Of these, approximately 7.11 lakh accounts have unclaimed balances of up to Rs 1,000, totaling Rs 30.52 crore.
There are a total of 31.86 lakh inoperative EPFO accounts, with a total deposit of Rs 10,903 crore.In the Rs 0-1,000 balance category, there are around 7.11 lakh accounts with a total deposit of Rs 30.52 crore. If this effort is successful, the remaining 25 lakh inoperative accounts can also be covered under a similar automatic refund system.
The Labor Ministry said that many accounts are 20 years old and have not seen any transactions in the last three years, which has led to them being placed in the inoperative category. The accounts selected for the pilot phase already have Aadhaar-linked bank details with the EPFO, allowing the retirement fund body to directly credit pending amounts to subscribers.