EPFO New Rules Set To Ease Transfer of Provident Fund

Moneylife Digital Team 02 April 2024

Personal Finance

The new financial year in India updates rules for your savings plans, taxes and other investment matters. In this manner, from 1 April 2024, the employees’ provident fund organisation (EPFO) has introduced significant changes that should help individuals when requesting provident fund (PF) transfers.

According to media reports, under this new rule, when an individual changes jobs, their old PF balance will be automatically transferred to the new employer, thus eliminating the need for EPFO account-holders to manually request PF transfers when joining a new company. Earlier, despite having a universal account number (UAN), individuals were forced to undergo the hassle of requesting PF transfers which would no longer be necessary.

Under the new rules, such transfer requests would occur automatically without the member having to apply for the transfer manually.

“Such a simple measure has only now been taken. At least two more very simple decisions need to be taken, otherwise claim time troubles will not go away,” says Aakash Goel, an engineer, management graduate and chartered financial analyst, appreciating the new rules and highlighting the hassles faced by individuals or nominees during the claim process.

He suggests that the EPFO should not allow anyone to “have more than one non-zero member account” and furthermore, “payments should be automatically made to the nominee when the claim is verifiable online through a government-issued death certificate, which would be made available to the EPFO in a digital or physical format by the nominee.”

According to him, these rule changes are much needed to ease the claims process for nominees and heirs.

The UAN serves as a centralised platform for multiple member IDs issued to an individual by different employers. With the use of a UAN, linking of several EPF accounts (member IDs) to a single member is functionally simplified. UAN thus provides a range of services, including a dynamically updated UAN card, an updated PF passbook with all transfer-in details, the ability to link previous members’ PF IDs with the present PF ID and the option for automatic transfer request initiation upon changing employment.

EPFO’s recently released data indicates that 1.56mn (million) members were added to the employment payroll in December 2023, the highest of the past three months. There has been an increase of 11.97% in the net EPFO member addition during the month compared to November. Further, the year-on-year (y-o-y) analysis reveals a growth of 4.62% in member additions compared to December 2022.

The payroll data also highlights that approximately 1.20mn members exited and subsequently rejoined EPFO. This figure represents a significant 12.61% increase compared to the previous month of November 2023 and stands as the highest recorded in the past five months. These members have switched jobs and rejoined in establishments covered under the ambit of EPFO and opted to transfer their accumulations instead of applying for final settlement.

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