The Employees Provident Fund Organisation is switching to an electronic payment system, which will allow it to credit the PF amount to the members’ bank accounts within two days of claim authorisation. EPFO is becoming more customer-friendly these days as it is trying to stave off competition from the new pension scheme, or NPS.
“This is a major step towards improving customer satisfaction,” said an EPFO official. “It will also reduce the likelihood of wrong payments,” he said, requesting anonymity.
EPFO covers around five lakh establishments under its three schemes and has about five crore subscribers. It sends payments through cheques, a process that takes up to a month and leads to a large number of complaints. NPS manages the retirement savings of central government employees who joined service after April 1, 2004 and those of many state governments. It was opened to all individuals recently.
There have been demands that EPF subscribers be allowed to migrate to NPS, which provides better service to its subscribers and offers higher returns.
An autonomous body under the ministry of labour, EPFO manages three schemes — the Employees Provident’ Fund Scheme, Employees’ Pension Scheme and the Employees’ Deposit-Linked Insurance Scheme.
EPFO will collect the mobile numbers of the members so that it could send SMS alerts informing about credit of the pension amount.
The organisation will make payments to its account holders using the National Electronic Find Transfer Network (NEFT), which covers 95 banks with over 67,000 branches. NEFT is a nation-wide system that facilitates electronic transfer of funds between any bank branches in the country.
The move will also help the organisation in identifying the inoperative accounts and proceed with the disbursement process. As on March 2009, there were around 166096 in-operative accounts with a total balance of Rs 5,893 crore.
“We also expect to increase our claim ratio, which had seen a jump due to increase in receipt of claims. Also, we are short of manpower and have asked the Indian Banking System to assist us in our hiring requirements,” he said.
As per the EPFO report, there were around 11,75,160 claims pending till March 2009. Around 60,000 of these claims had been pending over for more than six months.
EPFO also holds view that speedy transfer of pension reimbursements will also arrest withdrawals from the schemes.
There have been over 46,69,330 withdrawals from the provident fund in 2008-09, a jump of 16% over the previous year.