May 132016

Interest to be earned on all inoperative EPF and PPF Accounts

The new financial year comes with good news for all those having an inoperative PF account. From April 1 of this year, all the inoperative PF accounts will be eligible for earning interest on the accumulated amount in their PF accounts. As per the recent announcement of Employment Provident Fund Organization (EPFO) all inoperative EPF accounts will be eligible to get accumulated interest, which will be benefit to many account holders who have an inoperative account due to job switch over.

inoperative PPF and EPF accounts

PF accounts

PF or Provident Fund is a retirement scheme which is available for the individuals who are salaried. It is a scheme that secures the future of all employees across the country. Under this scheme a certain amount of the employee’s salary (12%) is deducted and is contributed to the fund. The employer also contributes the same amount into that fund and then the account earns an interest annually. The PF account is carried forward regardless of your job changes.

Below listed table gives you the answers for doubts which commonly arises among people on EPF/PF 

S.No Question Answers
1 Whether it’s mandatory to have EPF Account? Its mandatory for employees who receives basic salary of Rs.15, 000 and above, and for EPF is optional for employees who get lower basic.
2 Whether there will be benefits on owning EPF Account? Yes! It’s just like an investment, where employees will get accumulated interest on retirements, resignation and for sudden death too
3 What is EPF and PPF? EPF – Employees Provident Fund, applicable only for salaried persons. Meanwhile, PPF – Public Provident Fund, is for long term investment for workers of unorganized sectors and self-employed persons
4 How do I check my EPF balance? Visit where you will get proper details about your EPF status, balance and many other information
5 Is is possible to contribute more on EPF? Yes! One can make additional contribution to his or her EPF account according to their wish. There will be no changes in rules or terms for additional contribution

Inoperative PF account

In general, an EPF account without any contribution for the period of 36 months will be considered as inoperative accounts. And as per the terms of EPFO, all in operative accounts will set under different terms and guidelines. Initially interests were paid even on inoperative accounts, depending on the money accumulated. But then on April 1st, 2011 it was announced that interest will not be paid on these accounts. The ruling party then, UPA had stopped the interest on such accounts as they wanted to discourage parking of funds with the EPFO in these inoperative accounts.

Interest on your inoperative PF accounts

The Central Board of Trustees (CBT), which is the highest decision making body in the EFFO has announced that now they are going for a pro-worker plan and so they will be crediting interest on the inoperative PF accounts as well. According to the head of the CBT, BandaruDattatreya, from now there will be existence of inoperative accounts.

It is estimated that this decision will benefit many people across India. There are said to be more than 9 crore of such account holders having a deposit of approximately 33000 crore.

Recent rule change in the EPF withdrawal and otherwise

Few months back the Ministry of Labor and Employments of India came up with some modification in the rules and regulations relating to the PF accounts. The rules mainly related to the early withdrawals, here are the modifications-

  • As per the old rule, PF Balance can be withdrawn after the unemployed period of 60 days. But now all PF account holder can be withdraw only after his or her retirement age. The withdrawal cannot exceed the amount that the employee has contributed himself and the interest
  • Previously the retirement age was 55 years of the individual but then now the age has been increased to 58 years.
  • In case you resign from your job, still you cannot withdraw the whole money until your retirement age. Previously you could withdraw it.
  • Earlier PF account holder had the option of withdrawing 90% of his PF balance once they get pass 54 years. But now the withdrawing age is revised to 57 years. So salaried person can withdraw his 90% of his or her PF balance only after passing 57 years.

Keeping the above factors in mind, the government has decided that since an employee cannot withdraw the entire amount before the retirement age, which is 57, even though he may be without a job, the government will also do their bit by paying interest for all the inoperative accounts. This will be benefit for all individuals who are jobless and also are not able to withdraw their PF money. So with this decision of the government many employees with have a sigh of relive. Especially the people who are not employed or cannot work but have an inoperative PF account can seek for benefits from this decision.

Other Articles

  1. List of banks authorized to open PPF accounts online and Offline
  2. PPF Account in PNB 

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