As per current norms established by Employees’ Provident Fund Organization (EPFO), 20 days is the stipulated time taken by them to settle Provident Fund claims and to deposit the money into the employee’s bank account. The last and only time I personally withdrew the PF funds, it took me close to 60 days.
But things are changing, and changing fast. As per reports emerging, EPFO is all set to embrace technology in a major way, which will not only bring down the time required to settle claims but also enable online withdrawal of PF funds – a fantasy which so many employees had since so long.
IT Infrastructure for Provident Funds
Right now, EPFO receives close to 1 crore applications per year from employees for settling PF claims. And this huge exercise is done manually.
From now on, EPFO is enabling an Aadhaar card based online system, which will enable direct online withdrawal of the PF claim from the bank account, and the whole process would be settled in 3 hours, compared to 20 days which is the standard.
As per EPFO’s Central Provident Fund Commissioner V P Joy, they are right now integrating a complete IT infrastructure, connecting all their field offices (there are 123 of them) spread across the nation with one central server for instant verification of the claim and for allocating the funds to the respective bank accounts within 3 hours.
As per Joy, this new system would be made live by May of this year.
And the trigger of this unified system would be Aadhaar card database.
Aadhaar Card Enabled PF Withdrawal: The Magic
EPFO is right now requesting Aadhaar cards for all their users (employees, pensioners, company owners etc) and integrating it with their central servers. For enabling complete software based solution, EPFO is linking PF Accounts, pension accounts, bank accounts and Aadhaar numbers with the main database, so that verification becomes faster and easier.
March 31 is the last date for linking Aadhaar card for every PF account holder, and once it is done, then online withdrawal of PF funds would become live effective May 2017.
Why Is Provident Fund Important?
Financial Planners hail PF as one of the most crucial post-retirement plans for any salaried employee. As per EPFO norms, 12% of the salary should go to the PF fund, which is matched equally by the employer. 8.3% of this goes to the Pension Fund.
It is generally not advisable for salaried employees to withdraw their PF funds in between, as the funds are meant for retirement purposes. And to encourage savings via PF funds, Govt. has announced no tax liability on PF funds, if the employee doesn’t withdraw the fund for 5 continuous years.
The interest rate provided on PF funds is announced every year by EPFO.