EPFO News; EPF Begins Refund Of 7.11 Lakh Dormant PF Accounts; Credit Process Underway

EPF Refund Initiative Kicks Off For 7.11 Lakh Dormant Accounts: In a significant relief for Provident Fund subscribers, the government has initiated a process to return Rs 30.52 crore lying in 7.11 lakh inactive accounts under the Employees’ Provident Fund Organisation. The move is part of a wider exercise to shut down 31.86 lakh dormant PF accounts that have seen no activity for years. Many of these accounts are reportedly over two decades old and have remained without transactions for at least three years.

As part of the pilot phase, around seven lakh accounts have been identified. These accounts carry balances ranging between zero and Rs 1,000 and are already linked with Aadhaar-enabled bank details. The EPFO will directly credit the pending amounts into the respective bank accounts of subscribers or, where applicable, their legal heirs. If this model proves successful, the remaining inoperative accounts will be processed in a similar manner.

Why Accounts Become Inactive

The Provident Fund is a compulsory retirement savings scheme for private sector employees. Under the current system, employees contribute 12 per cent of their basic salary towards the fund, and employers match this contribution. Over time, employees may switch jobs or fail to transfer their PF balance to a new employer’s account.

When no transaction takes place in a PF account for three consecutive years, it is categorised as dormant or inoperative. In many cases, members leave behind smaller balances, either due to lack of awareness or to avoid the perceived inconvenience of filing a withdrawal claim.

Officials have noted that such inactive accounts create administrative complications. Large volumes of unclaimed PF money remain locked in the system, affecting financial planning and official compliance processes.

Scale Of The Issue

The magnitude of dormant PF accounts is substantial. At present, around 31.86 lakh inactive EPFO accounts collectively hold Rs 10,903 crore. Out of these, 7.11 lakh accounts fall within the Rs 0 to Rs 1,000 balance bracket, together accounting for Rs 30.52 crore.

Although each individual amount may appear small, the cumulative total runs into thousands of crores. The government believes that addressing these small balances first through an automated refund system will help streamline the overall clean-up exercise.

If the pilot project is implemented smoothly, nearly 25 lakh additional dormant PF accounts could also be covered under a similar mechanism in the next phase.

How The Refund Will Work

The key factor enabling this initiative is Aadhaar-linked bank details already available with the EPFO. For the selected accounts, subscriber information has been verified, allowing the organisation to directly transfer the pending Provident Fund refund without requiring fresh claims.

This approach aims to reduce paperwork and eliminate delays typically associated with manual withdrawal requests. For account holders who may no longer be actively tracking their PF balance, the direct credit system offers a simplified solution.

In cases where the original subscriber is no longer alive, legal heirs may receive the unclaimed PF money as per existing procedures. The ministry has indicated that the focus is on ensuring rightful beneficiaries receive their dues without unnecessary hurdles.

Why Small Balances Matter

While larger PF sums are usually claimed promptly, smaller balances tend to remain untouched. Many members feel that the effort involved in filing a claim outweighs the benefit of withdrawing a modest amount. However, when multiplied across lakhs of accounts, these small sums collectively represent a significant pool of funds.

By addressing this issue, the Labour Ministry hopes to bring greater efficiency to the EPFO system. Clearing dormant PF accounts will not only return money to rightful owners but also improve record accuracy and operational clarity.

The initiative reflects a broader push towards transparency and digitisation in retirement savings management. For millions of PF subscribers, the move signals a more proactive approach in resolving long-pending account issues.

With the pilot project now underway, attention will be on its execution and outcomes. If successful, it could mark a major step in reducing the burden of inactive accounts and ensuring that employee savings are not left idle for years.