Inoperative PF accounts may not get interest from 2011-12

Jashant ( ) (337 Points)

17 August 2010  
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Inoperative PF accounts may not get interest from 2011-12
15 Aug 2010, 1015 hrs IST,PTI

NEW DELHI: Holders of about 3 crore inoperative provident fund accounts may not get any interest on their deposits from the next fiscal if the recommendations of the EPFO's advisory body, Finance and Investment Committee (FIC), are approved.

The FIC has recommended to the EPFO's apex decision making body, Central Board of Trustees (CBT), that interest should not be credited to inoperative accounts from 2011-12. FIC's recommendations are generally accepted by the CBT, which is headed by Labour Minister.

All those accounts where no subscriptttion has come for three years are inoperative accounts. EPFO is spends about50 crore on maintaining these accounts.

At present, around10,000 crore of unclaimed money is lying in more than 2.9 crore inoperative accounts of the Employees' Provident Fund Organisation (EPFO) that has a total subscriber base of 5.6 crore.

The committee has also recommended that EPFO should freeze the inoperative accounts with balance of up to500 and transfer the money to special reserve fund.

About 1.05 crore inoperative accounts have less than500, which constitutes 34.58 per cent of all such subscribers.

However, during the FIC meeting, Bhartiya Mazdoor Sangh Secretary B N Rai, a representative of employees, suggested that the decision of freezing these accounts should be left to the CBT.

Another employee representative, Hind Mazdoor Sabha Secretary A D Nagpal also protested against the freezing of inoperative accounts and suggested that the issue should taken to CBT for further deliberations.

According the amendment suggested by the FIC in Employees Provident Fund Scheme rules, the freezing of account means that a subscriber would cease to be a member of the Fund and the balance of his account would be transferred to the Special Reserve Fund.

The issue is likely to come up at the CBT meeting, which is scheduled for September 4.