Recently, the Employees’ Provident Fund Organisation (EPFO) introduced a simplified single-page claim form for partial or complete withdrawals. We talk to experts on need of simplification of provident fund processes.
Saraswathi Kasturirangan, partner, Deloitte Haskins & Sells LLP
The move to an online approach by EPFO has reduced processing time. Manual intervention has been reduced by doing away with the need for inspection. Issue of Universal Account Numbers (UAN), linking of Aadhaar and bank accounts have enabled easy transfer of PF balances.
While these are really laudable, the expectations are now much higher. The ESI smart card holds significant information, introduction of a process to share data across ESI and PF departments and seed PF accounts with Aadhaar numbers may be explored, especially for sectors such as construction, textiles, etc.
EPFO could provide a one-time window for inactive members to obtain UANs and update their Aadhaar numbers by interacting directly with the EPFO rather than former employers.
Capturing the nominee details will go a long way in providing timely PF benefits, especially in cases of death. There is lack of awareness on the requirement to update the nomination details where there is a change, for example, marriage, child birth, etc. Active campaigns to enhance online updation of nomination is needed.
For employers with significant global mobile population, dispensing the manual filing of Certificate of Coverage (COC) applications, enabling employer level status check facility of COC application and online filing of IW1 forms will go a long way in ease of business.
Sonal Arora, head, payroll and labour law compliance, TeamLease Sevices Ltd
The recent reforms in EPFO no doubt benefit the members and employers both and need to be appreciated but this must be viewed as only the first phase of corrective action. EPFO still needs to move towards completely online withdrawal process for PF withdrawals and pension. Further, the death claims process needs to be revisited and made simpler. Post the death of any subscriber, the family has to run from pillar to post, with a plethora of supporting documents to get the benefit. At a practical level, the inspection process of EPFO—particularly the lengthy inquiry procedures under section 7A of the Act is still a painful exercise that most corporates dread. There is no specified time period for which the records need to be retained, therefore many a times it is left to the inspection officers’ discretion to demand records that are several years old, leading to undue harassment .
EPFO also needs to look at further reducing administrative charge of 0.85% for EPF scheme and 0.01% for EDLI scheme (translating to about 3.5% of the contribution amount). These charges when compared to New Pension Scheme (NPS) are quite high.
Further, the EPFO and finance ministry should deliver on the promise of giving employees a choice between EPF and NPS. EPFO really needs to think about reinventing itself to remain relevant in the era of competition and increasing employee choices.
Sonu Iyer, tax partner and people advisory services leader, EY India
The EPFO has been continuously undertaking several steps to add user-friendly features to simplify its processes.
Introduction of Composite Claim Forms (CCFs) is the latest such step, which further simplifies the process for final settlement, partial withdrawal and pension benefits by consolidating the existing claim forms and does away with documents that were earlier required to be filed along with the claim forms.
However, there are some more suggestions that can further simplify the organisation’s processes.
While it has been simplified, the CCF is still required to be signed and filed at the Provident Fund Office manually. The whole process can be made online to minimise the human interface. Another area is that the discrepancy or a mismatch in the personal information of a member may become a hindrance in the process of EPF balance transfer or withdrawal. The process of correction of such information in the EPFO database may be made online to replace the manual filing of application for the same.
Compliance for International Worker like filing of the Form IW-1 monthly or an application for Certificate of Coverage may be made completely online. Last year, EPFO won the National Award on e-Governance for launching the UAN. We hope EPFO continues to add such e-initiatives to make its processes more simple and user-friendly.
Melvin Joseph, founder FinVin Financial Planners and a Registered Investment Adviser
EPF is the first step in retirement planning for the salaried employees. It mostly invests in debt products and has gained acceptance. Though it has introduced many steps in that direction, there is still scope for more transparency and simplification in process. Linking of Aadhaar, SMS alert, one page PF withdrawal form, etc are steps in the right direction.
With a proposal for investing more PF money into equities, members should know about the investment process. The members should get an annual report on the investment performance.
Another mystery area is the management of Employees Pension Scheme (EPS). Every month 8.33% of the basic pay (subject to a cap of Rs15,000) is going towards EPS. The monthly amount of Rs1250 (earlier Rs541) is going towards EPS and most of the employees have no clue what benefit they will get from this contribution. The scheme is managed as a pool and is used to give monthly pension at age 58. The pension is decided based on your service and the maximum is capped at Rs7500 per month. The scheme of EPS should be more transparent so that each member understands how it is beneficial to him.
Withdrawal of PF while changing the job should be discouraged by allowing smooth transfer of accumulated PF to the new employer. The option to migrate to NPS also should be encouraged in their long term interest.
