Interest credits to inoperative account
Q. Which of the following is/are true?
1) There are no interest credits on inoperative Employees’ Provident Fund (EPF) accounts, in the absence of any fresh contributions in these accounts for three years.
2) The Finance Ministry is planning to use the funds in such dormant accounts for creating a new Senior Citizens Welfare Fund.- Published on 31 Mar 16a. Only 1
b. Only 2
c. Both 1 and 2
d. Neither 1 nor 2
ANSWER: Only 2
- The government has scrapped a decision taken by the previous United Progressive Alliance government to suspend interest credits on inoperative Employees’ Provident Fund (EPF) accounts, in the absence of any fresh contributions in these accounts for three years.
- Interest income was not credited to such accounts since April 1, 2011.
- Under the new rules, EPF accounts will also continue to get interest credits for three years after members reach the age of 58 years. This provision will ensure that EPF members, who choose not to withdraw their deposits immediately at retirement, would continue to earn interest till the age of 61. A similar provision exists under the General Provident Fund (GPF) for government employees allowing them to earn interest for 12 months after they retire at the age of 60.
- Accounts will become inoperative only in cases where employees settle abroad permanently and fail to withdraw their account balance within 36 months. Similarly, in the case of an EPF member’s death, the interest on their savings will be credited for a period of three years after his or her death.
