The Employees’ Provident Fund Organisation rejected 34%, or one in every three, provident fund settlement claims made by its subscribers in the financial year 2022-’23, reported The Indian Express on Sunday.
There has been a sharp increase in the rate at which the organisation is rejecting claims for final settlement of provident fund amounts over the past five years. In the financial year 2017-’18, the rejection rate stood at 13%.
The Employees’ Provident Fund Organisation, under the Union Ministry of Labour and Employment, is India’s largest state-run retirement fund with around 290 million subscribers, of which 68 million are active subscribers. It has a total corpus of Rs 78,00,000 crore (or Rs 7.8 trillion).
Provident fund accounts are mandatory for workers earning up to Rs 15,000 a month in companies with more than 20 workers. At least 12% of an employee’s basic salary is compulsorily deducted to be deposited in provident fund, while an employer also contributes an equal amount.
In the 2018-’19 fiscal year, the Employees’ Provident Fund Organisation rejected 18.2% of all final settlement claims made by its subscribers. This rose to 24.1% in 2019-’20, 30.8% in 2020-’21 and 35.2% in 2021-’22.
The uptick in this rejection rate has been discussed several times by the organisation’s governing body, known as the Central Board of Trustees, reported The Indian Express citing two unidentified board members.
“The [rejection rate] has increased…after workers started to submit their applications online,” the newspaper quoted one of the officials as saying. “The system has become such that after a few days, claims are returned citing discrepancies…on account of just an alphabet in the name of the member not matching, or different details in Aadhaar.”
These discrepanies would have otherwise been fixed offline by the organisation’s help desk at the time of filing the claim, the official said to The Indian Express, emphasising the need for a similar system online.
On February 7, P Sivaraman, a retired employee of a tyre manufacturing company in Kerala’s Thrissur, died by suicide after consuming poison at the Employees’ Provident Fund Organisation Kochi office, the newspaper reported. This came after his final provident fund claim was rejected because of a mismatch in the organisation’s records and his identifying documents, which he had been trying to rectify for nine years.
When asked about Sivaraman’s case, the Employees’ Provident Fund Organisation told The Indian Express that it has begun an “administrative inquiry to ensure thorough investigation”. “The organisation remains vigilant, continuously monitoring and enforcing timely claim settlements,” it said.
In response to queries about the rise in rejection rates of final settlement claims, the organisation claimed that the present return rate of ineligible claims has declined.
“About 99% claims are being settled within the statutory time limit,” the organisation told the newspaper. “Due importance is being given to redressal of grievances [and] the redressal time has halved from two weeks to one week.”
The organisation processed more than five crore claims in the financial year 2022-’23, making payments worth Rs 1.5 lakh crore.
At least 5.21 crore claims were made for final settlement, transfer of provident funds, and for partial withdrawal of provident funds. Of this, 1.34 crore claims were rejected while 3.77 crore claims were settled.
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