The government on Tuesday overturned a five-year-old verdict and announced that inoperative employees provident fund (EPF) accounts will get the benefit of interest accrual, a move that will bring a smile on the face of millions of workers.
According to the Economic Survey for 2015-16, over 9 crore – with aroundÂ INR.44, 000 crore deposits in them – out of the total 15 crore employee provident fund accounts are inoperative. The inoperative accounts are defined as those where there have been no addition of funds by an employee or employers for 36 months.
Retirement fund body Employees’s Provident Fund Organization (EPFO) had stopped inoperative accounts from computing interest from 1st April 2011, to encourage employees to take out their PFs or combine it with an active account.
The EPFO had recently tightened withdrawal norms and in view of the new PF rules introduced by the ministry of Labour and Employment last month, the employees cannot withdraw their entire PF amount till they turn 58.The inoperative accounts that are not accruing interest is seen as an injustice against employees, who deposit their hard-earned money in PF and hence is considered to be the reason for the review.
Labour Minister Bandaru Dattatreya sought to blame the United Progressive Alliance (UPA) government for stopping payment of interest on inoperative EPF accounts. â€œNow we have taken a pro-worker decision. The UPA government which was claiming to be pro-worker stopped (payment of) interest on inoperative accounts. Now, we have determined to credit interest in inoperative accounts,â€ the Labour Minister said