Decoding EPFO’s tighter norms for operating transaction-less or inoperative accounts

How EPFO's tighter rules around security of inoperative and transaction-less accounts affect you

Are you holding any Employees’ Provident Fund (EPF) account where there is no transaction other than credit of interest every year? Or your PF account has been classified as an inoperative account (IO)?

If so, then you will need to acquaint yourself with certain changes that the Employees’ Provident Fund Organisation (EPFO) has mandated to govern such accounts.

An account may not have any transaction, for example, where you had worked earlier with an employer and contributed to PF (Account A). But when you switched jobs, rather than giving that account (A) details to your new employer, you opened a new PF account (Account B) and did not transfer the balance from the old account (Account A) to your new account (Account B).

That old account might be credited with interest on a year-to-year basis but there will not be any contribution and hence it may become a transaction-less account (TLA).

Also read: How 8.25% EPF interest rate has one more goody in its bag

An account may get classified as an IO account if the member retires from the service after attaining the age of 55 years and does not apply for withdrawal from such account within 36 months from the date of retirement. Likewise, in cases where a member migrates abroad permanently and does not apply for the withdrawal from the said account within 36 months from the date of such migration.

The EPFO has recently introduced an additional layer of security for such accounts (TLA and IO accounts) to prevent fraudulent withdrawals from such accounts. This is in the form of a Standard Operating Procedure (SOP) outlining the guidelines for handling matters such as Universal Account Number (UAN), updating the KYC and/or withdrawal etc, in relation to such TLA/IO accounts.

Also read: Explained: How EPF’s taxable and non-taxable accounts will work

As per these guidelines, no UAN can be generated without the EPFO collecting the biometrics. One would need to physically visit the field office. To avoid inconvenience, one can schedule the appointment through the EPFiGMS portal.

In special circumstances such as old age, disability etc, where one cannot visit the field office, the authorities can, at the request of the member, arrange to send an office representative to visit the member’s home for biometrics verification and UAN generation.

Where such accounts have active UAN and KYC seeded, they can be unblocked only after due verification and authentication as per the procedure contained in these guidelines.

There are detailed timelines specified for the actions by the employer and the concerned filed office staff/officers. In addition, the monitoring mechanism is also specified for the smooth running of the processes to efficiently serve the members.

This indeed is a welcome move to protect the PF accounts of employees. However, there are certain aspects which may require clarification. For example, international workers from most countries can withdraw the accumulated balance only after attaining the age of 58 years. How will biometrics be collected in such cases where UAN needs to be generated for the accounts but individuals are no longer present in India?

After how many months of no debit/credit in an account will it be treated as transaction-less, and blocked (though the guidelines do refer to the period as defined by the financial advisor (FA) and chief accounts officer (CAO) every three years, after which an account can be designated as transaction-less account)?

A clarification from the EPFO on these aspects will help its staff and the EPF members at large.