To discourage provident fund subscribers from neglecting their Employees' Provident Fund Organisation (EPFO) accounts, especially the ones in which no contributions were being made at all, with effect from financial year 2011-12, the EPFO decided to stop paying interest on accounts that had been inoperative for more than 3 years, or 36 months.
However, last year it rolled back this decision. As a result, now even if your account is lying dormant, or has been inoperative for more than 3 years, it will continue to earn interest like it did earlier.
Interest on inoperative PF accounts
After bringing in portability, in 2016, EPF also decided that an employee would not be able to withdraw contributions of the employer till she turned 58. But this caused other problems. The rule would make it difficult for someone quitting formal workforce to withdraw the entire money, and worse, after 3 years the account would become inoperative with no further interest paid.
There was strong pushback against this rule and ultimately the EPFO never implemented this rule. Further, in an order in November 2016, it decided to pay interest even on inoperative accounts.
According to V.P. Joy, Central Provident Fund Commissioner, the inoperative accounts will earn interest till retirement only. Also, if a person retires and does not withdraw the money, then after 3 years the account will become inoperative and no interest will be paid in this case.
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