Auto-settlement okayed by EPFO: What is the status of inoperative accounts?, Pg16

Key Highlights:

• The EPFO has 31.83 lakh inoperative accounts totaling Rs 10,181 crore as of March 31, 2025.
• 41% of these accounts have been inoperative for 5-10 years, while 22% have been inactive for over 20 years.
• The Central Board of Trustees approved auto-settlement of inoperative accounts with balances of Rs 1,000 or less.
• The pilot project will cover 1.33 lakh accounts with nearly Rs 5.68 crore, crediting amounts directly to Aadhaar-seeded and EPFO-linked bank accounts.

Detailed Insights:

• An EPF account is deemed inoperative if no contributions are received for three years after the member turns 55 years or retires.
• The auto-settlement initiative aims to simplify claim processing, eliminating the need for members to file fresh claims or provide documentation.
• KYC analysis has been conducted on inoperative accounts, with the initial phase focusing on Aadhaar-verified accounts.
• A pilot study is underway in 10 regional offices to validate member PF balance data for accounts with balances up to Rs 50,000.
• While most inoperative accounts have small balances (under Rs 50,000), a small number of accounts (13,000) hold large sums (over Rs 10 lakh), totaling Rs 4553.57 crore.

Key Concepts Involved:

• Inoperative Account: An EPF account where no contributions have been received for a continuous period of three years.
• Aadhaar Seeding: Linking an individual's Aadhaar number with their EPF account for verification and direct benefit transfer.
• KYC (Know Your Customer): The process of verifying the identity of a customer, ensuring compliance with legal requirements.