Out of a total of 15 crore accounts, 9 crore are inoperative with . Rs 32,000-crore savings `

 

National retirement fund body Employees Provident Fund Organisation has decided to give interests on inoperative PF accounts with effect from April 1, 2016, reversing a key decision of the previous UPA government in 2011.

The move will benefit millions of organised sector employees who will start receiving interest payments on their inoperative employees provident fund savings amo . 32,000 unting to a total of close to ` crore. Inoperative EPF accounts are those where there have been no contribution from either the employee or the employer for 36 months. Out of a total of 15 crore EPF accounts, nine crore are inoperative accounts -mostly belonging to people who have switched jobs but did not transfer their EPF savings.

The UPA government had in 2011 decided not to give interest on these accounts so as to persuade employees to withdraw their money or merge it with active accounts. The move had met with stiff resistance from trade unions that have been since then demanding its reversal.

"We have taken a pro-worker decision to give interest on inoperative accounts with effect from April 1, 2016," labour minister Bandaru Dattatreya said after the 212th meeting of the central board of trustees (CBT) of EPFO on Tuesday.

CBT -a tripartite body comprising government, industry and workers' representatives and chaired by the labour minister -is the highest decision-making body of EPFO. The decision comes in the wake of a recent EPFO notification that had restricted withdrawal of EPF accumulations. On February 25, EPFO had issued a notification tightening the withdrawal norms of provident fund.

As per a labour ministry notification, EPF subscribers will not be able to withdraw provident fund after attaining the age of 54 years, and will have to wait until they are 57 years to withdraw it.

As per earlier rules, EPF subscribers were allowed to claim 90% of the accumulations in their PF account at the age of 54 years, and their claims were settled just one year before retirement. Moreover, employees cannot withdraw all their EPF savings even if they have quit a job and are jobless, which was not the case earlier.

CBT on Tuesday also gave an inprinciple approval to the restructuring of EPFO as recommended by the sub-committee set up for the purposes. "A small committee under the CPFC (central provident fund commissioner) will address all anomalies in a month's time after which the restructuring exercise will start," Dattatreya said, adding that there will be a career advancement scheme for over 20,000 employees of EPFO who are waiting their due promotions for 19 years. Clarifying the role of EPFO on enhancing proportion of its incremental investments in government securities (G-Sec) from 50% to 65%, labour secretary Shankar Aggarwal said, "It has already been decided by the finance ministry." According to him, the finance ministry's decision has been conveyed to all stakeholders and there would not be any fresh notification from labour ministry .