Now, idle EPF accounts to earn 8.8% interest; over 97 million people to benefit

Amidst chaos over demonetisation of old higher currency notes, the Labour Ministry has brought some cheer for people by relaxing  norms for 'idle' employee provident fund (EPF) accounts. Now, even if an EPF account is inoperative for three years or more, it will earn an interest of 8.8 per cent, payable annually. According to a report in TOI, the Labour ministry spelt out these provisions in a notification issued on November 11. This move will benefit about 9.70 crore employees or workers.

According to officials around Rs 42,000 crore is lying in "inoperative accounts" across the country.

Prior to this, idle PF accounts were treated as inoperative. This notification provides that an EPF account will be treated as operative on termination of employment and the EPF account holder will continue to earn interest, unless the employee concerned applies for withdrawal of the accumulated balance in his EPF account or takes up another job in two months, with another employer who is covered by the EPF scheme.

 

On taking up a new employment, the EPF account can be transferred under the new employment. The interest payable is notified each year and for 2015-16 it was 8.8%.

Now, the account will be considered inoperative only when the employees retire at the age of 55 years or move abroad permanently. According to the notification, if the account holder dies, then too, his/her account will be considered inoperative.

On November 2, Labour Minister Bandaru Dattatreya had said, ""The inoperative (Employee Provident Fund) accounts are not being paid interest since 2011. As per the instructions given the Prime Minister Narendra Modi and Finance Minister Arun Jaitley, we decided to start paying interest to those accounts to make them operative".