Your EPFO savings could be at risk, unless you secure some important aspects yourself

The attitude towards employees, who actually go to an EPFO office, or try to communicate with them directly, is ‘here is somebody who wants his money, how dare he. Let us do as much as we can to trouble him or her, or the nominees, and meanwhile make merry.’ Can the EPFO be trusted completely?

Here's a question that can be answered with both 'true' and 'false', and both answers will be correct. "Do you think that one of the best savings options available in the country for the salaried class is the Employees' Provident Fund Organisation (EPFO) scheme?"

True: Hardly anything else gives you tax exemption at all three stages of investment, interest earned and withdrawal. The rate of interest, currently at 9.5%, is among the highest guaranteed interest rates, in this case with the backing and security of the Government of India. There is no upper limit on investment and you can make your employer match your contribution up to 12.5% of your total salary if you choose to. And finally, there appears to be a high level of computerisation and online resources, or at least a promise of the same.

False: Between the employers and the EPFO, they will try to keep the company's contribution to a minimum, by all sorts of tricks and false advice. The accounts are a mess. Interest calculation is skewed against us, the constituents/employees. Computerisation is still a distant promise. The online facilities are terribly complicated. And most of all, the EPFO is one government department which appears to be involved in all sorts of fraud, a new one every day, and from all sections and segments of society. And the pension part is totally unprotected for inflation.
 
+++
 
A few weeks ago I received information about a case where somebody had just received an EPFO slip for the FY2008-2009 that said, "DOB/DOJ is not available, please furnish the information through your employer." Since this person is now no longer working with the employer in question, he made some enquiries on his own and discovered that not only had the data for his date of birth and date of joining gone missing, but there was also some confusion and lack of data regarding his address, the spelling of his parent's name and worst of all, a total error in the spelling of the name of the nominee.

In addition, he was told verbally that since he had not come forward to correct the errors within six months of the date mentioned in the slip, which expired end-September 2009, it was assumed that the data was correct, and to change it now he would have to perform a vast variety of documentation-related activities, as well as probably genuflect multiple times at the subject EPFO office.
 
Please note, the slip for 2008-2009 was received by him from his ex-company in July 2011, which delay could have also been due to complicity between the company and the EPFO office, so there was no way this person could have even known that his personal details had suddenly gone adrift, after all these years. And the typical approach towards employees who actually go to an EPFO office, or try to communicate with them directly, is worse than in any other government or private telecom office you can think of. The attitude is that "Here is somebody who wants his money, how dare he, let us do as much as we can to trouble him or her, or the nominees, and meanwhile make merry." If s/he wants his/her money, then we will make them beg for it, is the message that comes out from behind all those citizen's charters.

Luckily there are options, in this day and age of the Right to Information Act, 2005, as well as the simple fact that the EPFO head office in Bhikaji Cama Place, New Delhi, is certainly effective in motivating correctives. But how many people use these routes? Most of them end up falling in neat traps set for them at the local EPFO offices, with the wide assortment of agents and touts who appear to flourish in that eco-system, and then get sucked into the spiral of corruption and fraud surrounding many of the EPFO offices.

So, step one is to write to your employer, or ex-employer, or the specific employer in whose name and number your personal EPFO account operates, and ask them for the following specific details:

# The latest EPFO amount in your account as applicable on 31st of March of the latest year as per their calculations.
# The latest EPFO slip if received from the EPFO, and if not received, then copies of correspondence pertaining to this delay. (By now you should have received the slips for FY 2010-2011 for amounts as of 31st March 2011.)
# Copies of personal data, nomination, DOB, DOJ and other details as filed by the company with the EPFO.
# Copies of latest Form 12A, Form 5, Form 10 and copies of challans as filed by the company with the EPFO going back to your DOJ.
# Copies of any pending investigations or queries that the EPFO has with the company.
# Copies of details of authorised signatories that the company has, and has had in the past with the EPFO.
 
Mark a copy of this letter to the relevant EPFO office that your account is in, by email as well as by registered post, and email a copy to the EPFO head office in New Delhi also. All contact details are available at their websites: http://www.epfindia.com/epfo_directory_ho.html; http://www.epfindia.com/epfo_directory_acc.html

Here it is important to point out that in all likelihood, unless the employer has a very pro-active and employee-friendly HR and accounts/F&A group, then you are not likely to receive most of this information, which is yours by right. The reality is that most companies depend on their EPFO agents, who depend on making the whole system as opaque as possible, and that there is always reason to believe that the HR/F&A/accounts people like it that way. Maybe it gives them power; maybe it is also true that frauds at EPFO simply cannot happen without participation of employers; maybe some other reason. {break}
We come to the second step, because, remember, this whole "game" of messing with your personal data is not being done because somebody loves you a lot. It is just another root for a variety of possible scams, since most of us do not double-check this data, till it is either too late, or till we cannot. In step two, we assume a little bit of familiarity with the RTI Act, and if you don't have that, then there is no dearth of organisations all over the country, as well as online, who will help you draft a simple RTI application and send it to the EPFO offices.
 
In this RTI application you are basically asking the EPFO for the same information as you have already asked your employers for, that is listed above, but in addition you will also want to ask the EPFO for some extra information. Like,
# Information on any existing frauds or investigations in the EPFO office relevant to your account.
# Information on any and all correspondence between the EPFO office and the company.
And two additional queries, which are important, too:
# If any of the above said statutory records are not available, the complete details of how it was destroyed/weeded out in each case.
# Electronic access to the catalogue (or catalogues) of all records of your public authority duly indexed in a manner and the form to facilitate right to information, either over the computer networks, or in the form of a diskette, or other electronic media at the prescribed fees.
 
Please note, while you are not obliged to send a copy of this RTI application to your employer, it helps if you do so, since, on receiving it, they will hopefully take on a very grieved and hurt approach, and then run around really fast to fulfil all compliances at their end, and respond to the first letter you wrote to them  that they probably ignored till then.

The third step gets slightly complicated and will require the help of somebody who works in a bank, or is an accountant who knows how to calculate to the finest details possible the tricky business of compound interest on increasing balances. By this stage, presumably, you will have received a lot of paper and slips with present balances, carry-forward balances from previous years, interest earned, company contributions, deductions by EPFO for service charges and for pension, and other details.

The most important piece of information here is that which tells you how much the company deposited on your behalf as your share, and the company's contribution. All these will be in formats that make mobile phone bills look like nursery primers, I have a few and have never been able to understand them , though my CA friends get their trainees to work on them and produce simple few line statements of flaws which show how the interest has been mis-calculated. Especially since the balance in your account was increasing month on month.

And with this information on hand, you approach the EPFO office again; by now they know that you are a practitioner of the RTI Act and will hopefully be treating you with a lot more respect and caution.

The question to the EPFO now is, 'What was the relevant date that the EPFO took to calculate the interest?' And you as an employee are not responsible for your employer defaulting or delaying in a choice of many ways; getting those defaults and penalties from the employer is the EPFO office's business, not yours.
 
To complicate issues even more, the EPFO office often chooses to take into account what date the company deposited the money in the bank, what date the money came into the EPFO coffers, and most unfairly, what date the money started reflecting in that specific branch account. The local EPFO office will then take all these factors in a way that gives them (and the employer) the maximum benefit, and you bear the loss. There have been cases where interest is simply not applied on the pending sums for months, or the increased balances are not reflected, thereby resulting in reduced interest earnings.
 
In actual fact, the EPFO is supposed to calculate interest for the increased amount on a monthly basis, on the 1st of the month it was due for, even if there were any defaults or delays by the employer or in transit. As far as the employee is concerned, the EPFO deductions and company contributions were made in their salary slip on the last date of the month, and need to be reflected as with EPFO on the 1st of the month, that is, the next day. All losses incurred by the EPFO due to default or delay by the employer are supposed to be collected from the employer, with penalties.

You now have to take these calculations, set them off against the details gathered above, and demand that the EPFO corrects their records in your case accordingly. And if you have got so far, then do your friends, colleagues, fellow employees and ex-employees a favour, and demand that the EPFO correct the interest calculations for them, too, along the same lines.
 
This, however, is only as far as your main component of EPFO is concerned. There are a few more elements, which shall be addressed in subsequent articles, like,
# Pension under the EPFO scheme.
# Lower or no contribution to EPFO by your employer.
 
+++

Do feel free to write for more guidance on these aspects, if necessary, at [email protected].

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    User

    COMMENTS

    Govindaraju Adabala

    3 years ago

    Good morning sir my pf account Date of joining is rong please telme correction process
    thanking you sir

    CJyoti

    8 years ago

    EPFO is headed by an IAS and manned by govt. servants who claim that they can do whatever they want as their topmost boss is above the law. All political parties in India, all union ministers, all CMs, all leaders have accepted that it is not possible to annoy the bureaucracy and hence none in govt. service is bothered about the CVC or the CBI. Everything in Indian government is purchasable. Hence, it is no use writing about EPFO. The organisation lives by corruption. One does not get to the top just by remaining honest. In fact, in India, honesty and integrity in govt. service are positive disqualifications and this can be empirically proved inter alia by the history of the bureaucrats selected by all governments for all jobs everyehere in every respect of statecraft. The EPFO beneficiaries must suffer at the hands of the organisation and the head of EPFO does not care.

    REPLY

    malq

    In Reply to CJyoti 8 years ago

    Dear C Jyoti ji, thank you for writing in. Humbly submitted, but I disagree with your view, and suggest you try a few RTI Applications directly to the Head Office of EPFO and see the results.

    There is a change in India, it takes time for this change, but it will happen. However, we have to make some effort too, and for that may i request you to please try along the lines I have written?

    Thanks and rgds/VM

    nn

    8 years ago

    THOUGH NOT RELATED TO ABOVE , PPF SHOULD ALSO MADE AVAILABLE ONLINE" FOR VIEWING AND DEPOSITING AMOUNTS, AS THEY ALREADY HAVE PASSBOOK, LIKE ANY OTHER SAVINGS A/C. MOREOVER WHY ONLY SBI OTHER NATIONALISED BANKS SHOULD ALSO BE PERMITTED.

    REPLY

    Sanjay

    In Reply to nn 8 years ago

    PPF is already available for online viewing through your Bank's website. My PPF acct is with SBI & is linked to my Savings account. I can do online txfer to my PPF acct from my Savings account. Have never visited SBI for PPF passbook updation in last 5 yrs as It is always available online :)

    R Nandy

    8 years ago

    Veereshji,
    This is a very timely article.
    I can also some other accounting discrepencies which are effected due to ommission and commision
    of EFP clerks.

    (1) Even after receiving the transferred amount for other PF trusts or EPFO all the ledgers are not update due to which effectively an accounting discrepency is created and money doesen't get reflected in the recepients
    account nor is interest accrued.In my case money received by Bangalore EPFO in 2007-8 is not yet reflected in my account.I had filed a grievance and they falsely closed the report that
    money is credited in account in 08-09 .I have further fileda grievance with account slip of 08-09 stating that no money is received as claimed by them.

    I have also visited their EFF office and did inspection of the account
    records. For many people in our organisation the transferred monies from pevious years are not added to their accounts.This was admitted by our company EPF agent.

    It seems they are reluctant to update account rcords and do it only once a
    years during Aug-Sept during statement generation.

    (2) The EPFO has also decided to stop giving interest for money for dormant account more than 3 years old. I am not sure how the trustees agreed to this.This will defraud
    lacks of poor people of their retirement savings as the procedure of EPFO is so cubersome that many people cant get the money transferred. They should have rather rolled out
    the unique EPF number and then initiated this measure to expediate the transfer all dormant accounts to the unique account number.

    (3)I am not sure if money is safe in the hands of the EPF.A major scam is waiting to happen as there is complete lack of transperancy.

    (4)The newly rolled out registration of mobile number for balance doese'nt work for me or my colleagues.This is guess is also another eyewash by the EPFO for the ministers and the public.


    (5)RTI seems to be the most effective step as it seems even the company EFP agent is also in a helpless situation to provide details.I also feel the EPF clerks are indulging in rent
    seeking after a discussion with one of their clerks.

    Regards
    R Nandy

    REPLY

    malq

    In Reply to R Nandy 8 years ago

    Dear Nandy ji, thank you for writing in.

    You are correct, EPFO accounts appear to be a scam waiting to explode, but hopefully correctives are being applied. I did meet some senior EPFO people at their HO, and their point of view was that over-dependence by companies as well as members/employees on agents meant that they received hardly any direct feedback, and that they encouraged the same direct to HO.

    Updating of ledgers, crediting of amounts, calculation of interest, all this and more is all very opaque, and the person at the bottom of the chain, the employee, seems to get the worst end of the stick. Which is why many people who know about EPFO call it a "tax", implying that it is money that will never come back - or even if it does, it will be diluted.

    Please file RTIs on the subject, they were never easier.

    best regards/VM

    The New Pension System needs a comprehensive online facility

    The majority of potential investors in this still-struggling scheme do not have an online platform for making payments. More points of presence are needed at various banks. Apart from these issues, the Bajpai Committee (set up by the Pension Fund Regulatory and Development Authority) proposals need to be implemented soon

    In August 2010, the PFRDA (the Pension Fund Regulatory and Development Authority) constituted a committee to review the performance of the NPS (New Pension System) scheme which was headed by GN Bajpai, former SEBI Chairman. The committee submitted its report at the beginning of this month, suggesting various measures to improve the NPS. However, there are still some issues that require attention.

    There is no online platform available for the majority of investors. As of now, only those investors who have registered for the NPS through ICICI Direct POPs (Points of Presence) can make online payments to their NPS accounts, which are debited from their linked bank accounts with ICICI Bank. The committee suggested that all bank POPs should make this kind of online facility available for their customers. Other banks—if they implement this feature (as suggested by the Bajpai Committee)—will make this feature available only to their subscribers from their respective POPs. But subscribers from non-bank POPs would be left in the lurch.

    Subscribers do have an option to enrol for an ECS (electronic clearing services) facility where the payments would be debited from their requested bank account on a predefined date. However, withdrawal and deposit would be cumbersome for those who have applied for an NPS Tier II from where an individual can deposit and withdraw money at will (however, their contributions do not enjoy any tax benefits). Data indicates that nearly half of the investors for these accounts are from non-bank POPs. The number of branches are also fewer compared to bank POPs, meaning that investors would have to travel longer distances, causing a lot of inconvenience.

    As of April 2011, there were approximately 13 non-bank POPs having almost 19% share in the total number of POP branches. They contribute around 25% to the total form collections and a whopping 49% of the total NPS Tier-II activations.

    When Moneylife contacted the PFRDA, we were informed that it may introduce an online payment option for all subscribers through a payment gateway mechanism in the near future. No specific date was mentioned. Until then, subscribers will have to make do with the present options.

    The NPS has been hampered by low participation ever since its launch in January 2004. In the past 7 years, only 12 lakh government employees have been registered with the NPS, a number which is on the lower side. The NPS was thrown open for all citizens in May 2009, and has failed to attract buyers as less than 50,000 (as of May 2011) individuals have subscribed to it so far. In terms of money managed by the PFMs (policy fund managers), as of 31 March 2011, the total assets under management by all PFMs amounted to Rs8,585 crore. Of this, the contribution from the non-government sector does not exceed Rs100 crore, of which a bulk has been contributed by two corporates-NALCO (National Aluminium Company Ltd) and NTPC (National Thermal Power Corporation), which have migrated their employees' pension schemes to NPS. This reflects the sluggish growth of NPS.

    Some of the suggestions by the committee  to increase penetration included that the postal department should increase the number of branches selling NPS, the mobile telecom service providers could extend NPS services through their customer care centres or through their extensive network of distributors-and PFMs should be allowed to have POPs to sell NPS. Along with this, the high cost of NPS was highlighted and a suggestion to lower costs and to increase the incentive to the distributor was given.

    You may also want to read:

    1. CAG pulls up SEBI, IRDA, PFRDA, other regulators, for retaining surplus funds
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    User

    COMMENTS

    Francis

    8 years ago

    A very good article. Me too suffering a lot due to non-availability of online NPS payment option. PFRDA talks a lot but do nothing.

    Veeraf

    8 years ago

    Thanks Rohan for your feedback. I had sent my Grievances to - [email protected] - the resposne was -
    ~~~~~~~~~~~~
    Dear Subscriber,

    This has with reference to your email, we would like to inform you that the Reactivation procedures are yet to be approved by PFRDA.

    Thanks & Regards,
    Subscriber Care Group
    CRA

    ~~~~~~~~~~~~
    I will send it to the email you have specified and see if any action is taken.

    Thanks and regards,
    Veeraf.

    Veeraf

    8 years ago

    Surprisingly - I opened my NPs account using Kotak Jodhpur Branch as POP - they did not deposit my checks on time and my NPS A/C has been deactivated. now they say there is not way to activate it. What is the best way to resolve this situation. Please advise.

    REPLY

    Rohan

    In Reply to Veeraf 8 years ago

    PFRDA-Grievance Redressal Cell, [email protected]

    Veeraf

    In Reply to Rohan 8 years ago

    Thanks Rohan for your feedback. I had sent my Grievances to - [email protected] - the resposne was -
    ~~~~~~~~~~~~
    Dear Subscriber,

    This has with reference to your email, we would like to inform you that the Reactivation procedures are yet to be approved by PFRDA.

    Thanks & Regards,
    Subscriber Care Group
    CRA

    ~~~~~~~~~~~~
    I will send it to the email you have specified and see if any action is taken.

    Thanks and regards,
    Veeraf.

    Employees' Provident Fund: Online track

    At last things are improving for harried employees

    Employees have a tough time tracking the status of their provident fund (PF) accounts over the Web. Of late, the Internet has been flooded with PF-related complaints.

    “I have made a PF withdrawal claim 5-6 months back from my previous organisation, but, as of now, I have not received my claim amount in my account... I have been...

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