Inoperative PF accounts to earn interest now

NEW DELHI: Reversing a fiveyear-old decision, the Employees’ Provident Fund Organisation’s top decision-making body, the Central Board of Trustees, has decided to pay interest on all inoperative EPF accounts from April 1 onwards. Inoperative EPF accounts are those that have not received any contribution from employees or employers for 36 months. The move will benefit 90 million account holders with deposits of over `27,000 crore, but it will not apply retrospectively.

NEW DELHI: Millions of organised sector employees will start receiving interest payments on their inoperative Employees Provident Fund (EPF) savings from April 1 this year. Inoperative EPF accounts are those where there have been no contributions by an employee or their employer for 36 months.

Reversing its five-year-old decision which barred inoperative EPF accounts from earning interest, the Central Board of Trustees (CBT), the highest decision making body of the EPF organisation, on Tuesday decided to pay interest on all such accounts. The new rule, however, will not apply retrospectively, EPFO officials said.

The decision to stop the payment of interest to such accounts was taken in 2011 in order to dissuade workers from making their accounts inactive and encourage them from merging them with an active one. A move to review earlier decision comes in the backdrop of new EPF rules introduced last month that bar employees from withdrawing their entire PF amount till they turn 58. “Under the new rules, when one can’t withdraw the entire amount even after being jobless for two months why should not the government pay interest on the accumulated money,” said DL Sachdeva, the national secretary of All India Trade Union Congress. “The UPA government, which was claiming to be a proworker, stopped the interest on inoperative accounts. Now we have decided to credit interest in inoperative accounts,” labour minister Bandaru Dattatreya said after the CBT meeting here.