Holders of about 3 crore inoperative provident fund accounts may not get any interest on their deposits from the next fiscal if the recommendations of the EPFO’s advisory body, Finance and Investment Committee (FIC), are approved.
The FIC has recommended to the EPFO’s apex decision making body, Central Board of Trustees (CBT), that interest should not be credited to inoperative accounts from 2011-12. FIC’s recommendations are generally accepted by the CBT, which is headed by Labour Minister.
All those accounts where no subscription has come for three years are inoperative accounts. EPFO is spends about Rs 50 crore on maintaining these accounts.
At present, around Rs 10,000 crore of unclaimed money is lying in more than 2.9 crore inoperative accounts of the Employees’ Provident Fund Organisation (EPFO) that has a total subscriber base of 5.6 crore.
The committee has also recommended that EPFO should freeze the inoperative accounts with balance of up to Rs 500 and transfer the money to special reserve fund.
About 1.05 crore inoperative accounts have less than Rs 500, which constitutes 34.58 per cent of all such subscribers.
However, during the FIC meeting, Bhartiya Mazdoor Sangh Secretary B N Rai, a representative of employees, suggested that the decision of freezing these accounts should be left to the CBT.
Another employee representative, Hind Mazdoor Sabha Secretary A D Nagpal also protested against the freezing of inoperative accounts and suggested that the issue should taken to CBT for further deliberations.
According the amendment suggested by the FIC in Employees Provident Fund Scheme rules, the freezing of account means that a subscriber would cease to be a member of the Fund and the balance of his account would be transferred to the Special Reserve Fund.
The issue is likely to come up at the CBT meeting, which is scheduled for September 4.
This is a most reprehensible and retrograde step taken by the State going against all principles of natural justice and breaking the underlying covenant in this regard. Part of these funds represent the contributions of the employees themselves and it is certainly against the Constitution to stop paying interest thereon on the premise that these are inoperative accounts. Instead the authorities must take steps to contact each and every account holder and the nominees mentioned in the records to try to trace the employees and arrange to hand over the amounts along with interest thereon. It is sad, though not strange, that the Unions are not agitating against this draconian step.