Do You Have An Inactive EPF Account? Should You withdraw or Continue

The Buyt Desk

You changed your job or have stopped working but neither withdrew the EPF money nor transferred it to your place of employment. If so then there is is a possibility that the EPF account will be considered to be an an inactive account. Do you know that the government can forfeit your old inoperative or inactive EPF account?Many people have this misconception that keeping their EPF amount for a longer time will result in higher interest rates . But this is not the case always.

What are inoperative or inactive EPF accounts?

EPF accounts are considered inoperative or inactive if they are dormant due to any of the following reasons –

You have not withdrawn the amount within three years after you stopped working or left the company.
A EPF account holder died but the claim has not been settled or filed after 36 months of his or her death.
Amount remitted to a member has not been claimed back or has been undelivered.
Any amount due to an employee from an employer which remains unsettled after the claim.
No contribution has been made by the employer to the account for 3 years.

In the present day, EPF provides an 8.5% rate of interest without any tax. This is one of the best debt products that provide high returns with complete safety. According to the existing rules, if there are no contribution made in the EPFO account for 3 years, it will be considered an inoperative or inactive account.

Your account will also become an inoperative account if you requested a withdrawal but fail to claim the amount due to incorrect bank details, wrong address, or other reasons and your deposit is lying with EPFO for 3 years from the date it became payable.

Later EPFO clarified that interest will be payable on a non-contributory duration up to 58 years of age of a member. In 2016, the government launched SCWF (senior citizen welfare fund) regulations. According to SCWF regulations, the amount remaining in the inoperative EPF accounts will be moved to SCWF.

Withdraw or continue – which is the right option?

Whether you should withdraw or continue with your old inactive EPF account is based on the changes in ITAT, EPFO, and SCWF. Here, you’ll get the answer to this question.

Your EPF account will convert into inactive only when you are 58 years old and do not withdraw the balance from your EPF account (earlier it was three years from non-contributory duration).
EPFO will transfer your EPFO account to SCWF when you keep your non-contributory EPF account for over 10 years.
You will earn the eligibility to gain the interest from the date of non-contributory EPF (a day when you stop working and contributing to your EPF account) to the withdrawal time. Remember that such interest is taxable.
SCWF will keep your EPF account for 25 years. You will get the interest rate announced by the government on that specific SCWF.
You and your nominee are eligible to claim the EPF fund from SCWF through EPFO during the time of 25 years.
Once 25 years with SCWF gets completed and you still keep your account active without withdrawing any amount, the government will forfeit the amount. In case you want to withdraw the EPF account after 25 years, you would have to go to court to get the amount back forfeited by the government.

Note that your EPF account will not move to SCWF automatically. EPFO will notify you regarding this by reaching you through contact details linked to your EPF account. They will transfer it to SCWF if they don’t get any response from you and you don’t make any withdrawal.

heT bottom line is that it is good to move your old EPF account to the current operative EPF account immediately. Alternatively, you can withdraw your EPF balance after two months from unemployment or a non-contributory period.