Can anyone confirm for me whether after the amendment of the rate of interest on PF (8.5% to 9%), there is any restriction that the claimant will not receive the rate of interest on PF after 3 years? I have not withdrawn my PF from my previous company for the last four years. Someone has informed me that I will not receive interest on my PF amount (which is still with my previous company) after three years.
Please confirm.
From India, Faridabad
7Please confirm.
From India, Faridabad
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Dear Yogesh Mehta, To my knowledge the above decision will come in to force on 01.04.2011. Prior to that you may apply to tranfer the previous amount to the present. Abbas.P.S
From India, Bangalore
From India, Bangalore
Dear Sir Is there any notification ? That means I will get full rate of interest till 31.03.2011
From India, Faridabad
From India, Faridabad
Dear Yogesh and Shreekanth,
I think that the notification to disallow interest on inoperative PF accounts from the 37th month onwards and its effective date is yet to come from the EPFO. The decision was conveyed by the media. As per this information, in the 190th meeting of the Central Board of Trustees (EPF) presided over by the Honorable Union Minister for Labour and Employment Shri. Mallikarjuna Kharge on 15.9.2010 has taken the above decision.
TAXGURU, the leading tax consultancy website in India, has published its details on 18.09.2010 as under:
"PF accounts idle for 36 months or more to fetch no interest
Submitted by: admin on dated Saturday, September 18th, 2010
The decision by the Employee Provident Fund Organisation (EPFO) to stop paying interest on accounts that have not been operated for 36 months or more is expected to cover 60 per cent of the accounts. According to EPFO estimates, there were 30.5 million inoperative accounts across 120 offices. In all, the agency had 47.1 million subscribers at the end of March 2009, which is estimated to have increased during the last financial year. However, the latest data on the total number of subscribers was not available.
In all, the agency estimated that Rs 15,416 crore was lying in inoperative accounts (see table).
While 85 per cent of the inoperative accounts have a balance of less than Rs 5,000, such accounts having less than Rs 1,000 are 51 per cent. The balance in some of these is as low as Rs 1 or Rs 2, but maintaining these accounts costs around Rs 100. EPFO said over 11 per cent of the inoperative accounts had less than Rs 100.
The low balance in inoperative accounts was the result of subscribers giving up on their jobs, while the ones with more funds may have been the result of members choosing to leave the balance and opting to open a new account while switching jobs.
INOPERATIVE ACCOUNTS
Balance Rs Accounts Million Amount Rs cr
1-500 10.55 553.43
500-1,000 5.09 508.73
1,000-5,000 10.30 2657.70
5,000-10,000 2.25 1712.70
10,000-1 lakh 2.16 5542.02
1 lakh-10 lakh 0.13 3550.28
Over 10 lakh 0.02 891.03
Total 30.50 15415.89
Calculations based on EPFO estimates
"As long as someone is in employment, the employer pays a 1.1 per cent fee on the amount deducted. But the moment the deduction stops, the fee also ends, as it cannot be levied on the employee. So, EPFO ends up spending money to keep the account running," said an official.
Although one option was to levy an annual maintenance charge of Rs 100 on the inoperative accounts, EPFO has decided against it.
Instead, yesterday, the Central Board of Trustees decided that from April 1, 2011, EPFO will stop paying interest for inoperative accounts from the 37th month.
It was also decided that in case these accounts remain dormant and if any member claims it, with proper identity, the balance in the account will be paid to the subscriber. Also, in case an establishment defaults in payment of contribution for 36 months, accounts would be made operative on payment of the dues and the interest on it."
Abbas.P.S
From India, Bangalore
I think that the notification to disallow interest on inoperative PF accounts from the 37th month onwards and its effective date is yet to come from the EPFO. The decision was conveyed by the media. As per this information, in the 190th meeting of the Central Board of Trustees (EPF) presided over by the Honorable Union Minister for Labour and Employment Shri. Mallikarjuna Kharge on 15.9.2010 has taken the above decision.
TAXGURU, the leading tax consultancy website in India, has published its details on 18.09.2010 as under:
"PF accounts idle for 36 months or more to fetch no interest
Submitted by: admin on dated Saturday, September 18th, 2010
The decision by the Employee Provident Fund Organisation (EPFO) to stop paying interest on accounts that have not been operated for 36 months or more is expected to cover 60 per cent of the accounts. According to EPFO estimates, there were 30.5 million inoperative accounts across 120 offices. In all, the agency had 47.1 million subscribers at the end of March 2009, which is estimated to have increased during the last financial year. However, the latest data on the total number of subscribers was not available.
In all, the agency estimated that Rs 15,416 crore was lying in inoperative accounts (see table).
While 85 per cent of the inoperative accounts have a balance of less than Rs 5,000, such accounts having less than Rs 1,000 are 51 per cent. The balance in some of these is as low as Rs 1 or Rs 2, but maintaining these accounts costs around Rs 100. EPFO said over 11 per cent of the inoperative accounts had less than Rs 100.
The low balance in inoperative accounts was the result of subscribers giving up on their jobs, while the ones with more funds may have been the result of members choosing to leave the balance and opting to open a new account while switching jobs.
INOPERATIVE ACCOUNTS
Balance Rs Accounts Million Amount Rs cr
1-500 10.55 553.43
500-1,000 5.09 508.73
1,000-5,000 10.30 2657.70
5,000-10,000 2.25 1712.70
10,000-1 lakh 2.16 5542.02
1 lakh-10 lakh 0.13 3550.28
Over 10 lakh 0.02 891.03
Total 30.50 15415.89
Calculations based on EPFO estimates
"As long as someone is in employment, the employer pays a 1.1 per cent fee on the amount deducted. But the moment the deduction stops, the fee also ends, as it cannot be levied on the employee. So, EPFO ends up spending money to keep the account running," said an official.
Although one option was to levy an annual maintenance charge of Rs 100 on the inoperative accounts, EPFO has decided against it.
Instead, yesterday, the Central Board of Trustees decided that from April 1, 2011, EPFO will stop paying interest for inoperative accounts from the 37th month.
It was also decided that in case these accounts remain dormant and if any member claims it, with proper identity, the balance in the account will be paid to the subscriber. Also, in case an establishment defaults in payment of contribution for 36 months, accounts would be made operative on payment of the dues and the interest on it."
Abbas.P.S
From India, Bangalore
Dear Abbas, You have been one of the best advisors on PF matters on this forum. Thanks for sharing so much of valuable information. Keep posting Regards M.V.KANNAN
From India, Madras
From India, Madras
Dear Yogesh Ji Mehta,
Please allow me to tell you that the EPFO is not a bank or a financial institution or a company to keep your earnings as a fixed deposit. Please withdraw your legitimate dues as early as possible and keep them elsewhere where you can earn an equal amount of interest. You may also consider investing in gold. Please remember and also inform your friends who change jobs from one employer to another to transfer their PF accounts to the new employer and continue with only one PF account. Change jobs for better prospects, but do not change your PF account or open new PF accounts each time you switch jobs. You may continue with the existing PF account despite changing jobs. This will benefit you by ensuring continuity of Pension contributions and length of service despite changing employers.
Thanks and regards,
From India, Pune
Please allow me to tell you that the EPFO is not a bank or a financial institution or a company to keep your earnings as a fixed deposit. Please withdraw your legitimate dues as early as possible and keep them elsewhere where you can earn an equal amount of interest. You may also consider investing in gold. Please remember and also inform your friends who change jobs from one employer to another to transfer their PF accounts to the new employer and continue with only one PF account. Change jobs for better prospects, but do not change your PF account or open new PF accounts each time you switch jobs. You may continue with the existing PF account despite changing jobs. This will benefit you by ensuring continuity of Pension contributions and length of service despite changing employers.
Thanks and regards,
From India, Pune
The notification of inoperative PF accounts has nothing to do with the rate of interest on deposits.
The text of the Inoperative Accounts Notification is as follows:
PF ACCOUNTS IDLE FOR 36 MONTHS OR MORE WILL FETCH NO INTEREST.
The decision by the Employees' Provident Fund Organisation (EPFO) to stop paying interest on accounts that have not been operated for 36 months or more is expected to cover 60 percent of the accounts. According to EPFO estimates, there were 30.5 million inoperative accounts across 120 offices. In total, the agency had 47.1 million subscribers at the end of March 2009, a number that is estimated to have increased during the last financial year. However, the latest data on the total number of subscribers was not available.
Overall, the agency estimated that Rs 15,416 crore was lying in inoperative accounts (see table). While 85 percent of the inoperative accounts have a balance of less than Rs 5,000, such accounts with balances less than Rs 1,000 make up 51 percent. The balances in some of these accounts are as low as Rs 1 or Rs 2, but maintaining these accounts costs around Rs 100. EPFO stated that over 11 percent of the inoperative accounts had less than Rs 100.
The low balance in inoperative accounts was the result of subscribers giving up on their jobs, while the ones with more funds may be the result of members choosing to leave the balance and opting to open a new account when switching jobs.
From India, Chandigarh
The text of the Inoperative Accounts Notification is as follows:
PF ACCOUNTS IDLE FOR 36 MONTHS OR MORE WILL FETCH NO INTEREST.
The decision by the Employees' Provident Fund Organisation (EPFO) to stop paying interest on accounts that have not been operated for 36 months or more is expected to cover 60 percent of the accounts. According to EPFO estimates, there were 30.5 million inoperative accounts across 120 offices. In total, the agency had 47.1 million subscribers at the end of March 2009, a number that is estimated to have increased during the last financial year. However, the latest data on the total number of subscribers was not available.
Overall, the agency estimated that Rs 15,416 crore was lying in inoperative accounts (see table). While 85 percent of the inoperative accounts have a balance of less than Rs 5,000, such accounts with balances less than Rs 1,000 make up 51 percent. The balances in some of these accounts are as low as Rs 1 or Rs 2, but maintaining these accounts costs around Rs 100. EPFO stated that over 11 percent of the inoperative accounts had less than Rs 100.
The low balance in inoperative accounts was the result of subscribers giving up on their jobs, while the ones with more funds may be the result of members choosing to leave the balance and opting to open a new account when switching jobs.
From India, Chandigarh
Dear Surendra M. Bhanot,
In Mr. Yogesh Mehta's second posting, he asked about the notification on not receiving interest for more than 3 years after the PF account became inoperative. I was unable to answer regarding the notification from EPFO. However, you have posted about that notification. Kindly state the reference and date of the notification.
The relation between the interest hike to 9.5% and the stoppage of interest on inoperative accounts is that both decisions were made in the same CBT meeting.
Abbas. P.S.
From India, Bangalore
In Mr. Yogesh Mehta's second posting, he asked about the notification on not receiving interest for more than 3 years after the PF account became inoperative. I was unable to answer regarding the notification from EPFO. However, you have posted about that notification. Kindly state the reference and date of the notification.
The relation between the interest hike to 9.5% and the stoppage of interest on inoperative accounts is that both decisions were made in the same CBT meeting.
Abbas. P.S.
From India, Bangalore
Dear Sir,
To date, there is no provision for not paying interest on PF accumulations lying with EPFO. However, the EPFO has decided not to pay interest on amounts lying inoperative for more than 3 years wef 1/4/11.
As suggested by my colleagues above, it is always advisable to transfer the old account into the new establishment's account whenever a job change is made. This will ensure continuity in membership and qualifying years of service under the EPS 95 Scheme.
Thank you.
From India, Chandigarh
To date, there is no provision for not paying interest on PF accumulations lying with EPFO. However, the EPFO has decided not to pay interest on amounts lying inoperative for more than 3 years wef 1/4/11.
As suggested by my colleagues above, it is always advisable to transfer the old account into the new establishment's account whenever a job change is made. This will ensure continuity in membership and qualifying years of service under the EPS 95 Scheme.
Thank you.
From India, Chandigarh
Hi Employees do not continue the same PF number or withdraw the amount as they have to get it signed by the previous employer. In most cases, the previous employer does not sign so easily on the PF papers. The employee gets frustrated making rounds around the previous company even after leaving it, so he prefers to go for a new account, leaving the previous PF amount just like that.
From India, Hyderabad
From India, Hyderabad
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