Desai’s employer enrolled her in the Employees’ Pension Scheme (EPS), even though she wasn’t eligible for it. When she joined a new organization and applied for a PF transfer, her request was rejected.
From 1 September 2014, if one’s basic pay is more than 15,000 per month, they are not eligible for the EPS. For eligible employees, out of the employer’s 12% share, 8.33% goes towards the EPS. In order to withdraw contributions made towards the EPS, one first needs to transfer the amount to their PF account. The Employees’ Provident Fund Organisation (EPFO) may ask you to forgo interest on it.
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Her new employer, where she worked only for four months, was an exempted organization. Exempt organizations manage employee PF within the ambit of EPFO rules and regulations.
She withdrew her PF from this organization, but her PF from the first employer was still stuck.
Meanwhile, Desai started freelancing as an independent financial consultant with an insurance company. However, the company onboarded her as a full-time employee. She discovered it only when she approached the EPFO again to withdraw her PF from her first employer.
She was told she could transfer her PF to the third employer but not withdraw it until the EPS issue is resolved.
“I was appalled. First, I got the EPS balance transferred to my PF account. The EPFO required an undertaking that I would forego interest on EPS contributions when the transfer happens. Once the EPS issue was settled, funds got transferred to the PF account of the so-called third employer,” she said.
Her troubles did not end there.
The EPFO did not allow her to withdraw funds from the third organization because the employer had not made any contributions to the new PF account.
“How could there be any contributions when I wasn’t drawing a salary? I pestered the third employer to send a clarification letter to the EPFO about the mistaken onboarding. Despite sending it multiple times, the EPFO kept rejecting my withdrawal request. Lakhs of money was involved, and I was losing interest on it. In the end, I paid an agent to get it done. It took me 2.5 years to get it all sorted,” she said.
There are many people like Desai who face inconveniences while accessing their PF due to delays and even rejections. “Even physical visits don’t provide relief given the nature of the organization,” said Vishwanath B.G., associate director at tech-driven HR solutions firm Mercer.
The EPS enigma
Two EPS-linked issues are quite common.
The first relates to the non-transfer of EPS funds. To be sure, the EPFO manages contributions towards the EPS, be it exempted or unexempted employers. “Many employees withdraw or transfer their PF but do not consolidate the EPS. In the exempted scenario, if the pension is not consolidated, the EPF transfer/withdrawal is still possible, provided all credentials are correct. In the unexempted scenario, however, If PF has been withdrawn without transferring the EPS amount, the EPS contributions alone cannot be transferred, leading to a dead-end situation,” Vishwanath said.
The second EPS issue is more complex. From 1 September 2014, any new employee joining an establishment and drawing a basic wage of more than ₹15,000 per month is eligible only for the employee provident fund (EPF). This means that the full 24% (12% each by the employee and the employer) PF contribution is retained in the PF account.
In case of a continuous service, the EPS contributions continue even if your basic pay goes above ₹15,000. However, if you withdraw your PF from the previous employer, you will be considered a new employee, irrespective of your previous EPS contributions. If the EPS contributions are made in this situation, the EPFO will raise questions when you approach it for withdrawal or transfer.
“We recommend that employers ensure the completion of Form-11 for PF/EPS enrolment and inform employees about its significance for the EPFO deliverables. It is crucial to verify the accuracy of Universal Account Number (UAN) and KYC details before onboarding employees. This proactive approach can ensure employees receive continuous service benefits and face no difficulties in transferring their past PF accumulations, if any. Additionally, this will help avoid the imposition of interest and penalties for late deposits of PF/EPS dues with the EPFO,” said Anurag Jain, co-founder and partner at tax consulting firm ByTheBook Consulting Llp.
UAN is just a formality
Mumbai-based Abhishek Kulkarni, 39, had a simple task—transferring his PF to the new one. He did it by logging on to the EPFO website. He thought just an active UAN should be enough. However, he had to provide all the information about previous and existing employers manually. “When my UAN is active and previous contributions have been made under the same UAN, why does it not reflect in my records?”
To be sure, exempted organisations’ records do not show up on the EPFO website. “Both my existing and previous employers were exempted. It is hard to figure out if the transfer has indeed happened or not because the statement of PF deposits does not show up on the EPFO website,” he said.
Vishwanath agreed that it is a challenge. “The EPFO has made provisions where a transfer can be initiated online whether it is an exempted or an unexempted establishment. However, employees need to contact the previous employer whether it has finally happened or not.”
Besides, the EPFO has stopped entertaining offline transfer/withdrawal requests. If one is unable to sign in online, they will be in trouble.
Name mismatches are also very common. “The EPFO relies heavily on the accuracy of employees’ basic data. This data, which employees are responsible for entering, is crucial for various processes. Employers play a key role in verifying this information in the EPFO portal through self-declaration in mandatory Form 11 and by uploading KYC-related documents such as PAN, Aadhaar and bank account details linked to the UAN assigned to each member upon joining employment,” said Adarsh Vir Singh, founder of social-security consulting firm Nidhi Niyojan Inc.
“Any inaccuracies or discrepancies in the information provided by employees—such as their name, parentage, spouse details or date of birth—during the time of joining and the details on their PAN, Aadhaar and bank account can halt the entire process at the EPFO,” he added.
How to resolve EPF issues
A joint declaration form must be filled out by the employer and the employee. Employees may also have to meet regional PF commissioners. The EPFO has strengthened its procedures by issuing standard operating procedures (SOPs) for the online submission of joint declaration forms to address legacy-related corrections. “These corrections are crucial as they can significantly impact the timeliness of claim settlements, reduce repeated rejections and streamline service delivery at the regional level,” said Singh.
EPFO officials are supposed to resolve queries within 20 days. If it takes longer, one can lodge a complaint via the Centralised Public Grievance Redress and Monitoring System (CPGRAMS). It is an online platform, linked to all Central and state ministries/departments, where citizens can lodge their grievances with public authorities on any subject. One can also reach out to the directorate of public grievances (DPG).
“This will move your complaint to the Prime Minister’s Office, and the enquiry will go to the respective EPFO officer. It may ensure faster settlement,” Vishwanath said.
“There is no accountability nor flexibility to resolve common issues. In some cases, even the simplest of simple issues such as name mismatches or overlapping of service period, among others, can easily take more than one-two years,” he added.
Moreover, the EPFO must improvise its website to make it more user-friendly and consolidate records across its offices in the country.
