Coming soon: Provident fund number portability

NEW DELHI: Soon, you will be able to switch jobs without worrying about transferring your lifelong savings lying with the Employees Provident Fund Organisation (EPFO). Like your mobile number, the EPFO intends to shift to a portable unique account number that will make this possible.
And, unlike several government promises that come without any timeframe, EPFO has set a deadline for the end of 2012.A senior ministry official said the EPFO would soon appoint a consultant to initiate the process. The new number that every employee would get would be independent one. EPFO has at least 4.4 crore active subscribers, which is less than 50% of the actual accounts. The organization manages a corpus of at least Rs 3.5 lakh crore.
The move has been prompted by the entity’s experience with inactive accounts. At least 1 crore of the accounts with EPFO, with over Rs 15,000 crore, are lying idle as subscribers have not transferred the funds to their new accounts.
Inactive accounts stop earning interest three years after the last contribution. Sources said that while account portability would be of great help to employees, it would also reduce the unnecessary burden on the EPFO and would result in huge saving for the exchequer.
As per the plan, EPF accounts will be linked to the National Population Registry or the permanent account number (PAN) or the unique identity (UID) number. This will provide multiple options to the employees to avail the benefit.
Currently, salaried employees need to open new EPF accounts whenever they change jobs, and in most cases, the employers also insist that a new account be opened because the process of migrating old accounts is unviable and time-taking. It becomes more difficult if the employee shifts from one city to another for a job.
A government official said if the new system comes into being, it will lead to a decline in number of claims settlement procedures and will do away with 80% of the work burden of the EPFO. EPFO recently introduced an electronic facility for employers to contribute to EPF, and also enable subscribers to keep track of their accounts online.