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The decision by the Employee Provident Fund Organisation (EPFO) to stop paying interest on accounts that have not been operated for 36 months or more is expected to cover 60 per cent of the accounts. According to EPFO estimates, there were 30.5 million inoperative accounts across 120 offices. In all, the agency had 47.1 million subscribers at the end of March 2009, which is estimated to have increased during the last financial year. However, latest data on the total number of subscribers was not available.

In all, the agency estimated that Rs 15,416 crore was lying in inoperative accounts (see table).

While 85 per cent of the inoperative accounts have a balance of less than Rs 5,000, such accounts having less than Rs 1,000 are 51 per cent. The balance in some of these are as low as Rs 1 or Rs 2, but maintaining these accounts cost around Rs 100. EPFO said over 11 per cent of the inoperative accounts had less than Rs 100.

The low balance in inoperative accounts was the result of subscribers giving up on their jobs, while the ones with more funds may have been the result of members chosing to leave the balance and opting to open a new account while switching jobs.

INOPERATIVE ACCOUNTS
Balance
Rs
Accounts
Million
Amount
Rs cr
1-500 10.55 553.43
500-1,000 5.09 508.73
1,000-5,000 10.30 2657.70
5,000-10,000 2.25 1712.70
10,000-1 lakh 2.16 5542.02
1 lakh-10 lakh 0.13 3550.28
Over 10 lakh 0.02 891.03
Total 30.50 15415.89
Calculations based on EPFO estimates

“As long as someone is in employment, the employer pays a 1.1 per cent fee on the amount deducted. But the moment, the deduction stops, the fee also ends, as it cannot be levied on the employee. So, EPFO ends up spending money to keep the account running,” said an official.

Although one option was to levy an annual maintenance charge of Rs 100 on the inoperative accounts, EPFO has decided against it. Instead, yesterday, the Central Board of Trustees decided that from April 1, 2011, EPFO will stop paying interest for inoperative accounts from the 37th month. It was also decided that in case these accounts remain dormant and, if any member claims it, with proper identity, the balance in the account will be paid to the subscriber. Also, in case an establishment defaults in payment of contribution for 36 months, accounts would be made operative on payment of the dues and the interest on it.

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4 Comments

  1. Saurabh says:

    Is this rule still applicable..? There is so much confusion on this now… For E.g. I left my Job in Jan 2017, it’s been 48months now of no Contribution from me or my Employer. So will I get Interest for previous year (although it’s delayed for everyone this year) or is my account Dormant/Inoperative now?

  2. RAJ says:

    when some is in legal dispute in court with his employer for a long period around 13 yrs. by this mean he not contributing to EPF FOR LONG TIME. WILL SUCH CASE WILL NOT ATTRACT INTEREST, NEED CLARIFICATION. WILL SUCH EPF ACCOUNT CONSODER AS DEAD ACCOUNT.

  3. RAJ says:

    NO INTEREST IF THERE IS NO CONTRIBUTION FOR 36 MONTH, IF SOME IS IN LEGAL DISPUTE IN COURT WITH EMPLOYER, WILL NO CONTRIBUTION FOR 36 MONTH WILL BE APPLCABLE IN THIS CASE.

  4. Rajesh says:

    Hi,

    Just a small clarification on the above rule of ” No interest payment on PF accounts idle for more than 36 months “. 
    Does this mean that PF accounts which have been idle for more that 36 months ( say 60 months ) on the date of notification would earn interest only for 36 months ( thus making the rule effective retrospect i.e from a  back date ) or would the rule be applicable on PF accounts for which reach the 36 months period after the date of notification.

    Thanks in advance for the help.

    Regards,
    Rajesh

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