EPFO Plans Auto-Settlement of Small Inoperative Accounts

The Employees’ Provident Fund Organisation (EPFO) has identified 31.83 lakh inoperative provident fund accounts, a large share of which have remained idle for several years. To address the issue, the decision-making body of the organisation approved a pilot project for auto-settlement of small unclaimed balances.

Decision by Central Board of Trustees

During its 239th meeting on March 2, the Central Board of Trustees of EPFO approved a proposal to automatically settle inoperative accounts with unclaimed balances of ₹1,000 or less. The amount will be credited directly to members’ registered bank accounts.

What Are Inoperative EPF Accounts?

An EPF account becomes inoperative when no interest is credited after a specified period. This usually occurs when:

• A member retires after the age of 55 and
• No contribution is received for three continuous years after the member turns 55 or from the date of retirement, whichever is later.

For members below 55 years of age, accounts with no contributions continue to earn interest until the age of 58.

Scale of the Issue

As per data shared at the Board meeting:

• 31.83 lakh accounts are currently inoperative.
• These accounts together hold about ₹10,181 crore as of March 31, 2025.
• Around 41% of these accounts have been inactive for 5–10 years, while about 22% have remained idle for over 20 years.
• The figures exclude international workers.

Pilot Phase

Under the pilot initiative:

• About 1.33 lakh accounts with balances up to ₹1,000 will be covered.
• The total amount involved in this phase is about ₹5.68 crore.
• Funds will be automatically credited to Aadhaar-seeded and EPFO-linked bank accounts of members without requiring fresh claims or documentation.

Future Expansion

Based on the results of the pilot project, EPFO plans to extend the auto-settlement system to accounts with balances above ₹1,000, aiming to reduce long-pending claims and streamline the management of dormant provident fund accounts.

Source: IE