New Delhi: The Employees’ Provident Fund Organisation (EPFO) will mandatorily seed all 81 million provident fund (PF) accounts with Aadhaar by 31 December to make its online transactions smoother and help track an employee if he/she switches jobs.
The move comes after Prime Minister Narendra Modi reviewed the functioning of EPFO sometime ago and asked it to become more user-friendly and make its online interface more robust.
Though a Herculean task, the labour ministry has directed the EPFO to finish Aadhaar seeding on all EPF accounts in a time-bound manner.
EPFO, which functions under the labour ministry, has written to all it’s over 120 regional offices to make sure that the Aadhaar seeding happens on time.
Mint has seen a copy of the internal circular issued by the EPFO headquarters to its regional offices.
“It is noted that under the implemented universal account number (UAN) programme, the seeding of Aadhaar number in the UAN database of EPF members is very low. It needs to be emphasized that to identify the member across different employments, the UAN database of members has to be seeded with KYC (know your customer) details,” the circular said.
“At PRAGATI meeting ...it was pointed that seeding of Aadhaar number in the UAN database of EPF members is very low …subsequently the ministry of labour and employment has set the timeline to ensure 100% Aadhaar seeding in beneficiary database by 31/12/2016,” the circular added.
Pragati meeting is a brainchild of PM Modi to directly oversee the progress of different departments and interact with top bureaucrats to get an update on specific project implementation. UAN is a permanent number issued by EPFO to all EPF subscribers that help PF number portability. Like a bank account it makes EPF accounts permanent and employees are free to retain the account number throughout their work life.
As of 26 November, EPFO has issued 81.13 million UANs to organized sector employees via their employers but only 19.67 million Aadhaar numbers were uploaded by employers. Of the total Aadhaar uploaded only 16 million are KYC compliant, meaning the employers have verified these Aadhaar numbers of their employees who are contributing to EPF every month.
“Aadhaar is an important KYC for UAN but somehow companies have not come forward to upload this on the UAN database. This is clearly a case of employers’ apathy and what the EPFO is trying now is to rectify this so that its online transactions become smoother,” said a labour ministry official who declined to be named.
The officer said besides improving its users interface, it shall help identify an employee across his or her different employments and ease service delivery like payment of pension, reduction in withdrawal process hassles, and other such benefits.
“We have less than 2 crore Aadhaar numbers uploaded of the total 8.1 crore UANs issued. Companies over the next one month have to come forward and upload the Aadhaar number of their employees and approve them online. The 31 December deadline is tough task but we have pressed all our offices for the job,” said official.
“While people blame EPFO for bad or late service, they forget that companies often don’t do what is required of them. If a company cannot upload the KYC details like Aadhaar number, PAN and bank account details of their employees on EPFO website who is to be blamed and how do you expect EPFO to provide service. Can you do for buying an insurance or mutual fund…if you are prompt there why not in case of EPF accounts,” the official asked.
And it’s not an inaccurate complaint. Of the total 81 million UANs issued to EPF subscribers, employers have uploaded just 38.47 million bank accounts. It means more than 50% of the EPF subscribers accounts do not have a bank account linked increasing fear that whether an employee can get access to his retirement savings when he or she needs most without running after the employer.
EPFO manages over Rs8.5 trillion retirement corpus of its subscribers. It invests 90% in debt and 10% in equity instruments and gives return based on its investment returns. In 2015-16, it gave 8.8% interest rate to its subscribers. For 2016-17, it is yet to announce the rate of interest.