Salvage the PF account you forgot
Did you transfer your provident fund (PF) account to your new employer the last time you changed your job? Chances are, you didn’t. The Employees’ Provident Fund Organization (EPFO) recently found that over half of the 5.87 crore accounts it manages have had no fresh contributions for three years or more.
Changes in the job market in the past two decades has meant that many workers have multiple PF accounts from past jobs but have not been able to consolidate them —either due to sheer inertia or because of the procedural difficulties.
The government has decided to stop crediting interest in such dormant PF accounts from April this year. Some 3 crore PF accounts with nearly Rs 16,000 crore will be affected, though the absolute number of workers at risk may be fewer.
The EPFO expects nearly Rs 10,000 crore to be withdrawn or transferred from dormant accounts in 2011-12 and has come up with new guidelines for members to claim their locked-up retirement savings.
In case you wish to withdraw your PF and the past employer is available, your claim form has to be attested by the authorized signatory from that firm.
“For many dormant PF accounts, the past employer is not available or the firm has closed down or liquidated,” says Central PF Commissioner Samirendra Chatterjee . The EPFO board has laid out a different claim procedure for such cases. “If the employer cannot be traced, workers must submit an identity proof and a proof of residence. An attestation is also needed from your bank manager about the bank account where your PF savings will be credited,” Chatterjee told ET Wealth.
Official government identity cards such as a PAN card, voters’ identity card, passport, ration card or an Employees’ State Insurance Corporation identity card are acceptable. For address proof, a copy of your electricity, water or landline phone bill or a driving license would suffice.
The EPFO has also put in place a system to check fraudulent claims. For years, several PF offices have suffered from a systemic fraud where savings are siphoned out of dormant PF accounts.
Chatterjee, however, advises workers to transfer the balances from their old PF accounts to their current one. “It’s tempting to withdraw PF balances, but transferring them would make your retirement corpus fatter with the compounding of interest. No other avenue offers capital safety with high tax-free returns,” he says.
Transfers score over withdrawals, especially with just a month left before interest credits on dormant PF accounts stop. Withdrawals may take longer than a month and interest for the period from April 1 till the date of settlement would be lost.
Transfers may also take longer than a month, but requesting a transfer could ensure that you don’t lose any interest irrespective of how long the PF office takes to consolidate your retirement savings.
“If you apply to transfer your past PF accounts before 1 April, then such accounts will be treated as operative even if the actual transfer is pending. We will keep paying interest in these cases,” promises Chatterjee.