The Employees’ Provident Fund Organisation (EPFO) has introduced new guidelines to improve the security of inoperative EPF accounts. In a circular on August 2, 2024, EPFO announced several measures to prevent fraud, identity theft, and other unauthorised activities in such accounts.

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But first, let’s understand what inoperative accounts are.

An EPF account becomes inactive when no contributions are made for 36 consecutive months. It can happen for various reasons, such as a change of employment or retirement. Despite their inactivity, these accounts continue to accrue interest, making them a potential target for fraudulent activities. To address this, the EPFO has rolled out stricter measures to safeguard these funds and protect the interests of the rightful account holders.

As per the amended definition:

– An account becomes inoperative after 58 years, i.e., 36 months after the retirement age of 55.

– An account shall be classified as inoperative after the member attains the age of 58.

Handling Transaction-Less Accounts

Universal Account Number (UAN) Issues: The presence of a Universal Account Number (UAN) is a key consideration for transaction-less accounts. Accounts may exist where UANs are either absent or not linked with Aadhaar, making them non-KYC compliant. In such cases, one must generate a UAN or link an existing UAN with an inoperative account following specific procedures. The UAN cannot be generated according to the normal process for inactive accounts. So, an EPF account holder will have to visit the field office to generate a new UAN or link the EPF account to their existing UAN.

Note: Appointments for these visits can be scheduled via the EPFiGMS portal. Upon scheduling, members receive a token number with the date, time, and place for biometric verification. An SMS notification confirming the appointment will also be sent. During the visit, the field office performs photo capture and other necessary verifications before the UAN is generated or linked. For those unable to visit the field office due to physical disabilities or old age, the EPFO provides an option to request UAN generation through the EPFiGMS portal. After that, an EPFO representative will visit the member’s residence to complete the biometric verification process.

Ensuring No Duplicate UAN: Before generating a new UAN for transaction-less accounts, the field offices are required to confirm that no active UAN exists against such accounts. This step is crucial to prevent the duplication of accounts and ensure accurate record-keeping.

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KYC Compliance and Unblocking Process

Once the UAN is established, the next step is to complete the KYC (Know Your Customer) process. If the former employer is still operational, the EPF member must contact them to facilitate KYC linking. If the employer fails to complete the KYC process within 15 days, the responsibility then falls to the field office to perform the KYC directly. In cases where the former employer no longer exists, field offices have the authority to carry out the KYC process using the member’s PAN, Aadhaar, and bank account details.

After the UAN is linked and the KYC process is completed, EPF members can request the unblocking of their accounts. The EPFO emphasises thorough verification, including gathering information from multiple sources. Verification alerts may be sent to active UAN holders from the same establishment to confirm the claimant’s (Provident Fund) PF membership. A notification containing the claimant’s details and photo will be sent to 20 randomly selected active UAN holders (who have worked during the same period as the claimant), requiring confirmation from at least 5 of them.To further protect these accountsfrom fraud, another level of security will be put in place, the EPFO notes.

Special Considerations for Inoperative Accounts

The same verification and UAN generation processes apply for inoperative accounts that are also transaction-less, however, for accounts that are not transaction-less, a different set of guidelines have been put in place:

Inoperative Accounts Linked to UAN (KYC Seeded): Accounts inactive for less than three years but linked to UAN can be unblocked through an online request. This request must be approved by the employer or the field office. If the request is rejected, reasons for rejection will be provided. For accounts inactive for over three years, unblocking requests can be submitted either online or through a physical visit to a field office. After the submission of the request, the same process as verification of transaction-less accounts will be followed.

Note that online claims or transfer claims can be filed only once the request has been approved.

Inoperative Accounts without KYC Compliance: If KYC is not completed for inoperative accounts, members must approach their previous employer, and if the employer no longer exists, they must visit the field office for KYC completion. Once KYC is established, the unblocking process can be taken up by submitting the request online.

Procedures in Case of EPF Member’s Death

In the event of an EPF member’s death, the nominee can claim the funds in the EPF account. The field office will handle UAN generation and KYC seeding before processing such a claim. The officials will also conduct a biometric authentication of the nominee.

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When an e-Nomination Exists

If an e-nomination exists, claims can be filed online; otherwise, nominees must submit documents at the field office, which may be attested by the competent authorities if the previous employer cannot verify them.

These new EPFO guidelines aim to secure EPF accounts against fraud and unauthorised access. By implementing stricter KYC requirements, enhanced verification processes, and real-time monitoring, the EPFO aims to protect the savings of millions of workers. These measures ensure that the rightful owners can access their funds while preventing potential misuse, thereby reinforcing trust in the EPF system.