Major EPFO Reform: Subscribers With Rs 1,000 Or Less In Inoperative Accounts To Get Automatic Refund

In a major relief for provident fund subscribers, the Ministry of Labour and Employment has approved a pilot project to automatically refund money from small-balance inoperative EPFO accounts without requiring any application or paperwork from account holders, sources said. An EPFO account is classified as inoperative if there has been no contribution or transaction for three consecutive years.

Under the new decision, inoperative accounts with balances of Rs 1,000 or less will see the amount directly transferred to the subscriber's linked bank account. Beneficiaries will not need to file any claim or submit documents to initiate the process.

According to official figures, more than seven lakh inoperative accounts fall under this category. Accounts that are already Aadhaar-linked will receive the money immediately, while transfers to the remaining eligible accounts will be processed in phases.

A look at numbers

• There are a total of 31.86 lakh inoperative EPFO accounts, with cumulative deposits amounting to Rs 10,903 crore.
• Within the Rs 0-Rs 1,000 balance category, there are approximately 7.11 lakh accounts, holding a combined total of Rs 30.52 crore.
• If the initiative proves successful, the remaining 25 lakh inoperative accounts could also be covered under a similar automatic refund mechanism.

These inoperative accounts span a time frame ranging from over 20 years old to those that have seen no activity in the past three years. The move is expected to streamline fund settlement, reduce paperwork, and ensure quicker access to dormant savings for millions of workers.

Inoperative/Unclaimed PF Accounts

PF accounts, or Provident Fund accounts, are savings schemes for employees in India, managed by the Employees' Provident Fund Organisation (EPFO). Employees and employers contribute a portion of the salary to the EPF account, which earns interest over time.

EPF accounts can become unclaimed and inoperative due to various reasons:

• Employee's job change without updating new employment details
• Incorrect or outdated account details (like mobile number, address, or bank account)
• Employee's death, with no nominees or heirs claiming the amount
• Accounts being inactive for long periods, often due to employees not updating their details or employers not filing claims