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Almost all employees in India have a Provident Fund (PF) account. It acts as the best retirement fund. It also earns annual interest on the money deposited. But like all bank accounts, PF accounts also carry risks. There is a possibility that the money in this can be stolen by other people. These risks are especially high for inactive and inoperative accounts.
Recognizing these dangers, the Employees' Provident Fund Organization (EPFO) has come up with a new rule. Anyone who has done any transactions in their Pension Fund (PF) account for a long time will now have to verify their identity before withdrawing/transferring money from that account.
According to the circular issued on August 2, this new rule has been brought to check fraud, fraud, and forgery. Before withdrawing/transferring money from the PF account, identity verification is required. That means no one other than the PF account holder can get the money. These new rules came into effect from August 2.
Additional Verification for Inoperative Accounts
The main objective of the new rules is to protect money in inoperative PF accounts from unauthorized withdrawals. To protect against these, EPFO ​​asks for verification like biometric authentication, and KYC updates.
EPFO said that as per para 72(6) of the EPF scheme some accounts are labeled as 'inoperative accounts'. These accounts do not earn any interest. So think twice before investing in such things again. The funds can be accessed after the verification is done carefully.
What is an inoperative account?
As per the new definition, the account will not be operational after the PF member attains the age of 58 years. This means that even if an employee retires at the age of 55, their account will earn interest till the age of 58. PF account becomes an inoperative account after 58 years or 36 months.
That means the interest will be credited to the member's account till they reach 58 years of age. Under para 60(6) of the EPF Scheme, 1952, interest does not accrue once it becomes inoperative as defined in para 72(6).
What are Transaction-less Accounts?
If no money is deposited or withdrawn in any PF account for three years and only interest is earned, such accounts are called 'transaction-less accounts'. These are also known as inactive accounts. In the EPFO ​​circular, 'Special attention should be paid to transaction-less accounts. Currently, the methods of verifying the claims and details on these accounts are outdated. So these methods should be changed. New methods should be introduced. Using digital methods, this work should be done more quickly and easily.' That said.