I changed my job in March 2008, but never cared to know what happened to the balance in my Employee Provident Fund (EPF) account accumulated over a period of time with my past employer as I had opened a new EPF account through my new employer.
I promised myself to either get my old account transferred or claim the refund. However, it was put on the back burner.
Moreover, I did not worry too much as I was earning interest on that amount. Till one afternoon, I saw the ticker on a channel that EPF will earn 9.5% interest in the current year. Though I thought of transferring my EPF account, I remained in the grip of inaction till EPF made news again and this time for employees like me with dormant accounts.
On March 17, 2011, nearly 50 million employees rejoiced when the finance minister granted the gift of 9.5% interest on their Provident Fund deposits.
The proposal was cleared for raising the rate from the current 8.5% to 9.5% for 2010-2011. This makes the EPF returns best now, as the employee will get up to 13.6% pre-tax returns (with tax benefits), with 100% safety of capital.
Then followed the news for subscribers who had inactive EPF accounts due to job changes. An account becomes inoperative when there are no credits in the account for 36 continuous months.
However, no interest will be credited on the EPF accounts that have been inoperational for 36 or more months as on April 1, 2011. However, dormant accounts will continue to earn the interest for 36 months during which it remained dormant. This is when I applied for a transfer.
So what will happen to the interest that will accrue till the transfer process gets completed? Subscribers, who have inoperative accounts, will not lose interest if they have filed an application for withdrawal of accumulated funds or transfer to an operative account before March 1, 2011, even if the settlement happens later.
Such account holders will not be penalised for the delays though the Employees’ Provident Fund Organisation (EPFO) is expected to receive lakhs of applications for transfer/withdrawal of inoperative accounts.
The interest will be paid even if there is a delay in transfers or closures beyond one month of submission of applications from account holders.
This way account holders will keep getting interest till the account is actually closed or transferred, irrespective of when it happens.
The central board of trustees of the EPFO has decided to stop giving interest on accounts that have been inoperative for more than three years from the next fiscal.
The writer is chief editor, Apnapaisa.com