The central board of trustees of the Employee Provident Fund Organisation (EPFO), the key decision-making body for the fund comprising representatives from the government, employers and trade unions took decision to stop paying interest to accounts inoperative for more than 36 months or three years.

Most of people do not transfer their existing provident fund account to their new workplace when they toggle jobs. Earlier, these dormant accounts also earned interest so it was lucrative to let your money earn high interest rate offered by Employee Provident Fund Organisation. At present EPFO is giving return of 9.5 %.

At present, around Rs 10,000 crore of unclaimed money is lying in more than 2.9 crore inoperative accounts of Employee Provident Fund Organisation that has a total subscriber base of 5.6 crore.

“We are expecting a rush of people applying withdrawal of provident fund. Through, one month has passed since all dormant accounts have been frozen and interests are not being credited, but we are yet to witness any major increase in the people applying for withdrawal,” said a senior official of Employee Provident Fund Organisation. It takes about on eot two months for accounts to be close and money credited to the account holder’s bank account.

Process of withdrawal of provident fund is simple. Download a provident fund withdrawal form online and fill it and get is signed by authorised officer in your previous workplace and submit it in the nearest Employee Provident Fund Organisation office.

A Mumbai-based financial planner said fixed deposit accounts are offering return between eight and 10 % depending on various maturities and it is good idea to channelise your money from provident fund to fixed deposits, which are safe and also giving good retuns. Interest rates are expected to go up further after recent key policy rate hikes by the Reserve Bank of India (RBI).

Financial planners say it is best to apply for a transfer of fund account when you change jobs as the it will also ensure you have a good corpus when you retire after working hard over the years.

Source: [mydigitalfc]