NEW DELHI: At a time of high joblessness, stagnant real rural income and slackness in consumption demand, the pensioners are facing the problem of higher rejections in the settlement of their employees’ provident fund (EPF) claims.
The higher rate of rejection of claims by the EPF organisation (EPFO) is despite a rise in the settlement rate in recent years (see chart). Worse, the rejection rate is higher for those seeking final settlement.
EPFO members seek final settlement after retirement or having been retrenched. They are also not supposed to have a job in any establishment covered under the governing Employees Provident Funds & Miscellaneous Provisions (EPF&MP) Act, 1952, to qualify for the final settlement.
According to official sources, the EPFO’s highest decision-making body, the Central Board of Trustees (CBT), will likely deliberate on the issue of delay and rejection of claims in its next meeting. This also follows a member flagging the matter to the Central Provident Fund Commissioner (CPFC), Neelam Shami Rao. The date for the next sitting has not been decided yet.
In a recent letter to Rao, CBT member S P Tiwari wrote: “The EPF members retiring from the services are filing applications online to get their full and final settlement, which is either painfully delayed or rejected on frivolous grounds and needs to be addressed on a priority basis.”
The rejection rate for all claims has increased from 22% in FY19 to around 28% in the last three financial years. The most pronounced deterioration has been witnessed with regard to the final settlement claims, where the rejection rate rose to 34% in FY23 – meaning one in three claims – from 18% in FY19. Experts attribute the rise to technical issues and data mismatch.
“The rejection happens when members’ details are not matched with the system, and they don’t act in the prescribed manner,” said one EPFO official, adding that the EPFO never intends to hold back her dues.
Apart from final settlement/withdrawal, an EPFO member is entitled to withdraw money from her accumulated corpus, subject to certain conditions, to meet various financial needs, including the purchase of a plot/flat, construction and repair of the house, illness of self/family, for education/marriage of children, in special cases like unemployment, closure of establishments, non-receipt of wages for more than two months, in case of natural calamities and others.
Data from EPFO’s annual reports also showed that around 96% of the accepted claims, including final or partial withdrawal and illness or pandemic advances raised by its members in FY23, were settled within the stipulated 20 days, compared with 82% in FY19. EPFO implemented a direct benefit transfer scheme through electronic mode in 2017.
EPFO is one of the largest security providers in the world. As of March 2023, there were 298.8 million members, of which 12.4 million new members joined the scheme in 2022-23. EPFO has 75.6 million contributing members. Apart from a provident fund, a member is entitled to pension and insurance scheme benefits from EPFO. EPFO’s investment corpus, as of March 2023, stood at Rs 21.36 trillion.
The EPF contribution is mandatory for workers earning up to Rs 15,000 monthly in establishments with more than 20 workers. Each employee contributes 12% of her basic salary to the EPF scheme, which the employer matches.
As per the governing EPF&MP 1952 Act, the retirement fund agency is expected to settle all claims within 20 days. EPFO launched a Citizens’ Charter in 2017 to promote transparency and accountability and make the delivery system more efficient. According to the charter, all settlements are to be completed within 3-7 days.
The organisation has a set of guidelines and expects the members to act in a particular manner to avail themselves of different services smoothly.
Pensioners are required to submit the Jeevan Praman Patra/life certificate every year to continue receiving a pension. This can be done through the JPP portal, visiting pension disbursing bank, EPFO office, CSC certificates or post offices, through the UMANG app or postman or banking alliance facility at home. They can also use the newly launched UIDAI face authentication technology to submit JPP through the Jeevan Pramann application. In case of the death of the pensioner, intimation is to be submitted promptly by the survivors so that the widow/widower/children pension starts.
New members must link Aadhaar with their UAN. To avail of account auto-transfer, one member must submit her UAN with details of previous fund membership to the present employer. UAN is a permanent number and remains the same throughout a member’s life, allowing the portability of accounts while changing employment. This is also useful for accessing online services anytime, anywhere. The number of UANs allotted till March 2023 was 19.1 crore. Efforts are underway to issue UANs to all members.
Source: The Financial Express