EPFO News: To ensure that accumulated amounts meant for beneficiaries are disbursed to the rightful claimants, the Employees’ Provident Fund Organisation (EPFO) has issued fresh guidelines with regard to transfer and withdrawal of funds from ‘transaction-less’ and ‘inoperative’ accounts.There may be some PF accounts within the EPFO wherein the transactions have not happened for a long period of time, and this necessitates a preemptive verification mechanism while withdrawal of funds from these PF accounts to counter potential fraud, impersonation, and forgery, the EPFO said in a circular issued on August 2.
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Inoperative PF accounts to face additional layers of verification
The first and foremost action is to protect the capital or its flight from an account and this aims to shield the capital in these
accounts from unauthorized payments by employing robust processes such as biometric authentication and periodic KYC updates, the retirement fund body said.
The EPFO said that there are certain accounts that are classified as ‘inoperative accounts’ as per para 72(6) of the EPF Scheme. This classification entails that these accounts cease to earn any interest, further underscoring the importance of a diligent verification mechanism, it added.
What is an ‘inoperative account’?
As per amended definition of inoperative account, an account becomes inoperative after the age of 58 years, i.e., 36 months after the retirement age of 55 years. As per paragraph 60(6) of EPF Scheme, 1952, interest shall not be credited to the account of a member from the date on which it has become an inoperative account under paragraph 72(6) of EPF Scheme, 1952. However, as per amended definition, an account shall be classified as inoperative after the member attains the age of 58 years. Hence, interest shall be credited to the account of a member up to the age of 58 years.
What are transaction-less accounts?
Transaction-less accounts are those accounts which do not have any transactions other than crediting of periodic interest in three years. The transaction-less accounts are called inactive accounts as there are no transactions happened in the last three years.
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Additional layer for higher due diligence for transaction-less accounts
“The transaction-less accounts would require an additional layer for higher due diligence. Further, the existing claim settlement and verification procedures for these accounts necessitate revision to institutionalize greater scrutiny in the processing and settlement of such accounts. This entails a comprehensive reassessment of the existing practices to incorporate updated protocols, embracing digital technologies for enhanced efficiency within the evolving landscape of the EPFO,” the circular said.
