BackEPFO may soon offer bank-like facilities
PF office plans account number portability, may allow subscribersto withdraw retirement corpus from ATMs
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New Delhi: The Employees Provident Fund Organization (EPFO) is planning to bring in changes that will provide its 50 million subscribers facilities similar to banks, which will eventually allow them to withdraw their life savings from cash machines.
“The aim is to become as smooth as a bank," central provident fund commissioner K.K. Jalan said. “Like a bank, we should allow withdrawal of money without any hassles."
The reforms at the retirement fund manager will allow account number portability, strictly monitor exempted establishments, re-engineer pension settlement and restructure its human resources. The plan is aimed at becoming a customer-centric financial institution with a social security goal, two officials of the labour ministry said on condition of not being named.
EPFO functions under the labour ministry.
After computerizing its 120 odd offices across India, EPFO is now shifting to a central server facility that banks have with core-banking facility, another labour ministry official said, also declining to be identified.
“This will allow the organization to give unique account number and PF (provident fund) number portability, setting the stage for further bank-like facilities," the official said.
The unique number facility will be available by 15 October, according to the EPFO’s action plan.
After allowing online transfer of funds, the EPFO will allow a subscriber to withdraw his retirement corpus from ATMs. “The way we are going, we don’t see why we cannot allow ATM transaction to our subscribers in 12-18 months," said the official cited above.
The EPFO has 129.8 million accounts, out of which some 50 million enjoy some kind of electronic services. “Once account number portability is in place, it will do away with the problem of multiple accounts by one employee, transfer of balance funds from one to another, and consolidate total membership," the ministry official said.
The official said the action plan promotes technology adoption that will allow EPFO to digitize pension data, re-engineer pension distribution and allow online registration of new companies and establishments. Currently, when a new establishment becomes a member of the EPFO, it takes months to issue a unique code.
This will benefit employers, said the official.
The retirement fund manager has 4.4 million pensioners and the use of technology will make it easier for people to access funds.
“What they have done so far in terms of computerization is basic. They don’t have an integrated application model and each service or application runs in silos—too many compartments and less integration like a bank. That’s a key handicap," said a consultant who has worked with EPFO earlier. This person did not want to be named.
EPFO’s major challenge is lack of transparency, according to Ram Kishore Tripathi, national secretary of Hind Mazdoor Sabha, a national trade union.
“They need to make the system employee-friendly than employer-friendly, consolidate accounts and do away with the fear of any fraud. New-age companies involved in outsourcing activities often don’t pay PF to their employees and EPFO doesn’t crackdown on them," said Tripathi.
Giving unique numbers to a subscriber will benefit a lot of workers who often change jobs, Tripathi said.
EPFO manages a corpus of more than ₹ 6 trillion. The annual provident fund accrual has risen 16% since the 2012-13 fiscal year.
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