In the last couple of years, if you have switched your job for better career prospects, and transferred your old Provident Fund (PF) to your present employer you got the read this!

The Employees Provident Fund Organisation (EPFO) is issuing notices seeking refund of interest; from those members who have transferred their PF accounts after April 1, 2011 and whose requests have been settled. The EPFO is reaching out to the present employers of such PF members and thereby seeking refunds from the employees, citing wrongful credits of excess interest on their past PF balances.

It is noteworthy that while some members have received such notices, the others have been denied interest dues for the period after April 2011.

Earlier, (in March 2011) the EPFO had announced that "inoperative" PF accounts (i.e. the ones where there are no contributions for a period of 36 months or more) shall not be credited with interest April 1, 2011 and a notification thereto was issued. The idea behind such a move was to boost interest income of active PF account holders

What are the reactions of former PF commissioners?

Well, they are of the view that refund requests are unprecedented and there is no provision under the EPF law for seeking refunds after a member's account had been settled. They also questioned the propriety of the Government notification cited by such refund notices, which allows EPFO to stop crediting interest on "inoperative" PF accounts. Recently, retired central PF commissioner, Mr R.C. Mishra admitted that they didn't want to give the interest 'accrued on inoperative accounts to the active' account holders. "It should go to whom it belongs," he had said.

We are of the view that, it is incorrect on the part of EPFO to supersede the provisions of EPF law and seek refunds after a member's account has been settled. If the department takes one or two years to transfer or settle a member's account, they should not penalise members for the own bureaucratic delays. Also we see denying interest on inoperative accounts as an incorrect move, as it eventually precludes wealth creation of one's retirement savings. Thus the rationale of classification into inoperative accounts and active account is unjustifiable and is non-starter. We believe it is vital for EPFO's board of trustees to carry out their fiduciary responsibilities in a more prudent manner.

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