EPFO's Rising Rejection Rates: Employees Raise Questions.
The Employees’ Provident Fund Organisation (EPFO) has been facing criticism for its increasing rejection rates of Provident Fund (PF) withdrawal claims as users took this to social media.
As per the data, in the last five years, the rejection rate has risen from 16% to 33% which left many citizens frustrated and confused about withdrawing their hard-earned money.
Rejection rates by EPFO have gone up from 16% to almost 33% in the last 5 years.
Imagine, one in three applications to withdraw your own provident fund money is being rejected.
Don’t leave this money to chance, or to the lure of getting tax-free interest.
This is your life… https://t.co/xNlKhhwPf7 pic.twitter.com/0YW6BDYOrj— Manoj Arora (@manoj_216) November 25, 2024
A recent tweet highlighted the issue, where the EPFO rejected a PF withdrawal claim twice, citing “Multiple member IDs for same bank account” as the reason.
@socialepfo @nsitharaman
EPFO India has rejected PF Withdrawal claims twice for unnecessary reasons.Rejection Reason -> WARNING – Multiple member IDs for same bank account.
So what???
1) A citizen is performing Adhaar validation and sharing a copy of the cancelled cheque, what… pic.twitter.com/b7MYsYa0I5— Suansh Singhal (@SuanshSinghal) November 26, 2024
The tweet questioned the logic behind this rejection, especially when the citizen had performed Aadhaar validation and shared a copy of the cancelled cheque.
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This process is commonly followed in the insurance sector, making the EPFO’s rejection reason unclear. Furthermore, the citizen had made years of contributions without any issues, only to face technical problems during the withdrawal process.
The rejection process has been criticised for lacking a “social” approach. Citizens who have made regular contributions to their PF accounts are not provided with detailed explanations for the rejection or guidance on how to fix the issues and resubmit their claims. Instead, they are left wondering what to do next.
Many have shared their lousy experiences when they confronted rejection of their Provident Fund (PF) withdrawal claims.
EPFO is a nightmare. I’ve been trying for over a year to merge two accounts (past and present employer).
All other information has been the same for 20 years. Yet the merger was denied.
All I get is cryptic dismissals of complaints – case closed.
No interest was paid for two years.
Between… pic.twitter.com/HzNmwKc7Eo
— menaka doshi (@menakadoshi) August 7, 2024
These include incorrect or incomplete information, inactive Universal Account Number (UAN), insufficient balance, ineligible claims, discrepancies in service period, pending dues and lack of proper verification.
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However, employees stated that the rejections are being made incorrect not because of wrong information or data. A user said that he had filed an RTI seeking details and a count of incorrect rejections by one of the active EPFO offices in the past 5 years but he didn’t get any reply.
Had filed for an #RTI seeking details & count of Wrong / Incorrect rejections by one of the active #EPFOOffice in the past 5 years.
Having got no reply for almost 40 days from the #PIO I escalated it to the #AppellateAuthority & to my amusement the response I got was they “do not keep… pic.twitter.com/8UcRhqfKhb
— 𝐒𝐢𝐝𝐝 (@sidd_sharma01) June 15, 2023
What is EPFO?
The Employees’ Provident Fund (EPF) is a retirement savings scheme that applies to firms with more than 20 workers. Under this scheme, a monthly contribution of 12% of the employee’s basic salary, up to a maximum of Rs 1,800 (12% of Rs 15,000), is made.
Alternatively, the contribution can be 12% of the actual basic salary. Both models allow the contributions to be eligible for tax deduction under Section 80C, up to a limit of Rs 1.5 lakh.
Additionally, the contributions are tax-free if withdrawn after five years of continuous employment. The employer also matches the employee’s contribution of 12%, which is tax-deductible under the new tax regime.
The interest rate on EPF is around 7-8% which is tax-free until the individual is employed and the annual contribution is less than Rs 2.5 lakh. Furthermore, EPF can be withdrawn after two months of unemployment.
However, the outdated IT system often leads to withdrawal rejections and companies usually do not allow employees to opt out of the EPF scheme.
