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After remaining in the news mostly for wrong reasons this year, retirement fund body EPFO is looking to cross the digital Rubicon by way of providing a host of online services to its nearly 4 crore subscribers, including electronic settlement of PF claims. The idea is to increase ease of doing business for over 6 lakh employers covered under the Employees’ Provident Fund Organisation (EPFO).
“As part of its commitment to evolve into one of the best social security organisations, the coming 2017 will see introduction of many more online conveniences, including the ethos of Digital India and best practices that help improve the ease to do business in the country,” EPFO Central Provident Fund Commissioner V P Joy told PTI.
“The database of EPFO will see full consolidation through a centralised platform. This will facilitate real-time updation of records and member balances… simplify processes for employers and prepare EPFO to provide online services more efficiently that will culminate in online submission of all types of claims (PF withdrawal and pension fixation).”
Talking about conveniences for the stakeholders in 2016, Joy said EPFO will try to cover all eligible workers under the social security net. At present, subscribers who wish to settle their accounts with EPFO are required to apply manually.
For settling online claims, the subscribers will have to activate their Universal Account Numbers (portable PF) which are seeded with KYC details, including bank accounts, Aadhaar and permanent account number.
There is more. EPFO will try to reduce human interface with employers by increasing the use of digital compliance to shore up efficiency, transparency and accountability.
That said, 2016 was not a very good year for EPFO as it was marred by many controversies for reasons like putting restrictions on PF withdrawals and its reported tussle with the finance ministry over fixing interest rate on deposits for the previous fiscal.
Earlier in the year, EPFO decided to put restrictions on PF withdrawals to avoid capital erosion and boost savings by the members. But it backfired and led to widespread protest by workers that even turned violent in some parts of the country.
In the beginning of April, EPFO had to defer the decision till April 30 which had restricted 100 per cent withdrawal of provident fund by members after being without job for more than two months, among others.
As per the scheme, the subscribers who are out of job for more than two months can file for full and final settlement of provident fund.
EPFO also amended the EPF Scheme, 1952, to tighten the various norms for withdrawal of provident fund, including increasing the age limit for filing such claims by retiring employees to 58 years, from 54 years.
It was also stipulated that the requirement of two months of unemployment will not apply in cases of women members resigning from the services for the purpose of getting married or on account of pregnancy or child birth.
Later on April 19, buckling under protests and street violence in Bengaluru, the government had to roll back the order tightening rules for PF withdrawal, within hours of keeping it in abeyance for three more months.
Earlier in March this year, the government was forced to reverse the budget proposal to tax 60 per cent of the PF corpus at the time of withdrawal, following widespread protests.
Stung by all-round criticism, the government had to take back its decision to lower interest rate on PF deposits to 8.7 per cent for 2015-16 on April 29 and agreed to fix it at 8.8 per cent. It was the third EPF-related rollback since March this year.
Earlier, the finance ministry had rejected the retirement body’s decision to provide 8.8 per cent interest and fixed 8.7 per cent for 2015-16.
However, the finance ministry had its way in December and succeeded in bringing the interest rate on EPF deposits to 8.65 per cent for this fiscal, in line with falling rates on savings, due to surge in bank deposits post demonetisation.
According to EPFO income projections, the body could have retained 8.8 per cent for the current fiscal as well. It had the surplus of Rs 410 crore after providing 8.8 per cent for the last fiscal which could have made up the Rs 383 crore deficit at the same rate for 2016-17.
However, EPF remained the best bet for investors this fiscal compared with other savings schemes, including public provident fund, where rate of interest is 8 per cent for October-December.
In September, the government had decided to bring down interest rates on small savings schemes marginally by 0.1 per cent for the December quarter of 2016-17, which resulted in lower returns on PPF, Kisan Vikas Patra, Sukanya Samriddhi Account, among others.
The rate of interest on popular PPF was reduced to 8 per cent in the third quarter of the current fiscal as against 8.1 per cent in the previous three months.
Similarly, interest rate on Kisan Vikas Patra has been brought down to 7.7 per cent, from 7.8 per cent. As a result, KVP will now mature in 112 months instead of 110 months.