Retirement fund body Employees' Provident Fund Organisation (EPFO) is likely to consider a proposal today to provide interest on inoperative provident fund accounts.
According to the Economic Survey for 2015-16, over 9 crore - with around Rs.44,000 crore deposits in them - out of the total 15 crore employee provident fund accounts are inoperative. The inoperative accounts are those where there have been no contributions by an employee or employers for 36 months.
The retirement fund body had stopped payment of interest to such accounts from April 1, 2011 to encourage employees to either withdraw or transfer their balance in inoperative accounts to an active one.
The EPFO had recently tightened withdrawal norms. According to a new rule notified by Ministry of Labour and Employment last month, if a person after being unemployed for two months or more, wishes to withdraw money from the EPF account, he or she can only withdraw his or her own total contribution and interest earned on it. The employer's contribution and the interest earned on it can only be withdrawn after one reaches 58 years of age.
After the tightening of the withdrawal norms, there was a need for clarity on whether the employer's contribution and interest earned on it, which will remain locked in an inoperative account till the employee reaches 58 years of age, will earn interest or not.
Earlier, if a person was unemployed for two months or more, he or she could withdraw the entire amount (both employee and employer's contribution and interest earned on it) accumulated in his or her EPF account.
From India, Thana
59According to the Economic Survey for 2015-16, over 9 crore - with around Rs.44,000 crore deposits in them - out of the total 15 crore employee provident fund accounts are inoperative. The inoperative accounts are those where there have been no contributions by an employee or employers for 36 months.
The retirement fund body had stopped payment of interest to such accounts from April 1, 2011 to encourage employees to either withdraw or transfer their balance in inoperative accounts to an active one.
The EPFO had recently tightened withdrawal norms. According to a new rule notified by Ministry of Labour and Employment last month, if a person after being unemployed for two months or more, wishes to withdraw money from the EPF account, he or she can only withdraw his or her own total contribution and interest earned on it. The employer's contribution and the interest earned on it can only be withdrawn after one reaches 58 years of age.
After the tightening of the withdrawal norms, there was a need for clarity on whether the employer's contribution and interest earned on it, which will remain locked in an inoperative account till the employee reaches 58 years of age, will earn interest or not.
Earlier, if a person was unemployed for two months or more, he or she could withdraw the entire amount (both employee and employer's contribution and interest earned on it) accumulated in his or her EPF account.
From India, Thana
Further to above post.
Good news for 9 crore PF a/c holders! EPFO to give interest on inoperative accounts from April 1 | Zee News
This will be good news as interest will be paid.
Rationale of denying interest for non operative a/cs was not too good by saying that this move will prevent parking of funds.
Good gesture.
From India, Pune
Good news for 9 crore PF a/c holders! EPFO to give interest on inoperative accounts from April 1 | Zee News
This will be good news as interest will be paid.
Rationale of denying interest for non operative a/cs was not too good by saying that this move will prevent parking of funds.
Good gesture.
From India, Pune
The Ministry seems to be confused as various decisions taken hurriedly and later discarded making mockery of itself. Earlier, they have decided to stop interest on inoperative accounts which are more than 3 years old. Employees after leaving the organisation were not withdrawing the PF funds for several years as they were getting the interest on the amount, as if it is an SB account. To discourage this practice and encourage them to withdraw, they had announced that no interest will be paid on such accounts. However, this has been completely reversed and PF account is treated as SB account now. Moreover, companies PF amount withdrawal upto 58 years of age is also prohibited. Everyone is confused what the next course will be as there is no consistency in the decisions taken leaving everyone in the maze. Appears that there is some contusion in the Ministries i.e. Labour and Finance as both seem to be loggerheads of each other.
From India, Mumbai
From India, Mumbai
Hi
can anyone let me know if a employee dies with in the date mentioned in the pension scheme ( 58 years ) what can be done, is there any way to withdraw the pension amount ???
while issuing the offer letter each and every employee knows about the CTC,
and the deduction done in his / her CTC ,
so & so amount will be deducted for EPF ,
the amount deducted from the employee
the amount paid by the employer
and now why is the employer share should be withdrawn at the age of 58 years ??
how the employee will be aware about his / her pension amount at the time of withdrawal
is there any ways to withdraw the full EPF amount of a employee
Regards
From India, Bangalore
can anyone let me know if a employee dies with in the date mentioned in the pension scheme ( 58 years ) what can be done, is there any way to withdraw the pension amount ???
while issuing the offer letter each and every employee knows about the CTC,
and the deduction done in his / her CTC ,
so & so amount will be deducted for EPF ,
the amount deducted from the employee
the amount paid by the employer
and now why is the employer share should be withdrawn at the age of 58 years ??
how the employee will be aware about his / her pension amount at the time of withdrawal
is there any ways to withdraw the full EPF amount of a employee
Regards
From India, Bangalore
Dear Swetley,
I agree to your observation on the tussle between Labour & Finance ministry over PF funds.
However the current decision is obvious result of restricting withdrawal upto 58 years of age.
Also current environment is changed. With UAN portability / ePassbook / TDS on withdrawals before completing 5 years, employee transfer membership when they change jobs rather than maintaining multiple PF accounts.
So to me paying interest on inoperative account is not a confused decision.
From India, Mumbai
I agree to your observation on the tussle between Labour & Finance ministry over PF funds.
However the current decision is obvious result of restricting withdrawal upto 58 years of age.
Also current environment is changed. With UAN portability / ePassbook / TDS on withdrawals before completing 5 years, employee transfer membership when they change jobs rather than maintaining multiple PF accounts.
So to me paying interest on inoperative account is not a confused decision.
From India, Mumbai
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