March 29:Retirement fund body Employees’ Provident Fund Organisation (EPFO) is likely to consider a proposal today to provide interest on inoperative provident fund accounts.
According to the Economic Survey for 2015-16, over 9 crore – with around Rs.44,000 crore deposits in them – out of the total 15 crore employee provident fund accounts are inoperative. The inoperative accounts are those where there have been no contributions by an employee or employers for 36 months.
The retirement fund body had stopped payment of interest to such accounts from April 1, 2011 to encourage employees to either withdraw or transfer their balance in inoperative accounts to an active one.
The EPFO had recently tightened withdrawal norms. According to a new rule notified by Ministry of Labour and Employment last month, if a person after being unemployed for two months or more, wishes to withdraw money from the EPF account, he or she can only withdraw his or her own total contribution and interest earned on it. The employer’s contribution and the interest earned on it can only be withdrawn after one reaches 58 years of age.
After the tightening of the withdrawal norms, there was a need for clarity on whether the employer’s contribution and interest earned on it, which will remain locked in an inoperative account till the employee reaches 58 years of age, will earn interest or not.
Earlier, if a person was unemployed for two months or more, he or she could withdraw the entire amount (both employee and employer’s contribution and interest earned on it) accumulated in his or her EPF account.
The retirement fund body is also likely to consider a proposal to provide insurance cover to its subscribers for three years after cessation of employment.
The EFPO will consider a proposal for an amendment to Employee’s Deposit Linked Insurance (EDLI) Scheme that presently provides up to Rs. 3.6 lakh insurance coverage. The employers are required to pay 0.5 per cent of basic wages of workers as premium for the insurance scheme for their workers. Employees used to lose membership or benefit of scheme after quitting job.
EPFO manages a corpus of over Rs. 8.5 lakh crore and is expected to receive investible deposits of Rs. 1.12 lakh crore during the current fiscal.