BackEPFO to start online transfer of provident fund accounts
Move to help consolidate inactive accounts, give employees better returns, improve eligibility to get pension
Premium(Priyanka Parashar/Mint)
New Delhi: Employees will be able to transfer online their provident fund (PF) savings to a new account when they move jobs, the Employees’ Provident Fund Organisation (EPFO) said on Thursday.
The move will help consolidate millions of inactive accounts as well as give employees better returns and improve their eligibility to get pension, EPFO said.
“Within weeks, we will start online transfer of accounts. This will be hassle-free and subscriber-friendly," said K.K. Jalan, Central Provident Fund Commissioner.
The EPFO, he said, had two key problem areas—delays in claim settlements and transfers of PF accounts. “We have improved claim settlement record significantly and this (second) problem area will now get addressed," said the commissioner, who took charge of the office on 20 June.
EPFO has more than 90 million subscribers; only a little more than half of them are active members contributing continuously over a period of at least three years.
The retirement fund manager manages a corpus of at least ₹ 5 trillion.
EPFO authorities said online account transfer will reduce paperwork and their workload as many subscribers have more than one account that will now be consolidated.
“Once you consolidate them, the number of accounts to be managed could be much lower," said V. Ranganath, a regional PF commissioner in the EPFO headquarters in New Delhi.
Since EPFO does not credit interest to inactive accounts—those that haven’t received contributions for over three years—transfer of accounts to one active account will give subscribers better returns, said P.K. Udgata, additional provident fund commissioner.
Under the new provision, while shifting jobs, an employee can fill an online PF transfer form, get his employers’ digital signature, and submit it online.
The subscriber will be kept in the loop through mobile text messages of the status of the application. “Initially, in less than 30 days, we can transfer the account," Jalan said.
To begin with, the new Transfer Claim Form, a revised version of Form 13, can be submitted both manually and in the online format. “As some workers are not well-versed with the Internet and some establishments may not have digital signature, both the options will be available to employees," Jalan said.
These forms can be presented either through the new or the previous employer. Earlier, these could be submitted only through the new employer.
Ranganath said that by transferring an inactive PF account to an active one, an employee would improve his or her eligibility to get pension.
For getting pension, an employee needs to contribute continuously to PF for at least 10 years. Since many employees open new accounts every time they shift jobs, they fall short of the eligibility norm.
Every month, while 12% of an employee’s basic pay goes towards the retirement corpus, a portion of the employers’ 12% contribution goes to the pension fund.
Labour minister Sis Ram Ola said his ministry would make efforts for “timely settlement of claims of EPF beneficiaries".
Of 10.8 million claim cases in 2012-13, 1.2 million customers had expressed dissatisfaction as their cases were not settled within 30 days, according to official data. Besides, 141,000 EPF claim cases remained unresolved for more than 90 days in the last financial year, Mint reported on 19 June.
Jalan said his offices are settling 88% of EPF withdrawal claims within a month and that it would improve to 95% this year.
“There is a marked improvement over the last few months. But EPFO has to keep in mind that it needs to deliver on all its assurances. Unless you improve your service, the image of the fund manger will not improve," said Sushant Sen, a special adviser with the industry lobby group Confederation of Indian Industry (CII). “Account transfer is a key worry for subscribers and if they can do it in three weeks or a month’s time, it will be a huge plus."
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