On last Wednesday November 2, Shri Bandaru Dattatreya, Labour Minister 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, Labour Ministry decided to start paying interest to those accounts to make them operative”.
Now, even if an Employees Provident Fund account is inoperative for three years or more, it will earn an interest of 8.8 per cent/ interest as applicable time to time, payable annually. In the new PF Amendment issued on November 11, 2016, the Labour ministry removed out these provisions for making an account inoperative. Around 9.70 crore PF member will benefit from this new PF amendment.
According to officials across the country around Rs 42,000 crore is lying in “inoperative accounts”. As per this new notification, 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 new PF notification, if the account holder dies, then too, his/her account will be considered inoperative.