Source | The Economic Times
It should have taken 30 days for Sanjaya Kumar (27) from Odisha to withdraw his father’s provident fund of Rs 40,000, the post-employment, rainy day retirement stash that companies must compulsorily deduct from salaries.
Instead, more than 1,825 days have passed since Kumar’s father Krushna Chandra (53) died in 2011. “Please help me withdraw PF money, my mother is worried about losing it,” said Sanjaya, in a complaint posted on an online forum.
More than 10,000 companies — including 1,195 state-owned — nationwide have defaulted on provident-fund payments: 2,200 companies owe at least Rs 2,200 crore-to the EPFO, the portion of employee salaries they should have deposited.
The numbers of defaulting companies and institutions is growing. There were 10,091 defaulters in 2014-15, rising to 10,932 by December 2015.
Online consumer forums are flooded with complaints like those of Kumar’s, as hundreds of employees who have quit or retired from a company are deprived of their provident fund.
“We get lots of complaints from workers who have been denied their provident fund and also complaints of collusion between EPFO officials and employers,” said All-India Trade Union Congress secretary and EPFO trustee D.L. Sachdev.
A detailed questionnaire sent on June 29, 2016, to the Central Provident Fund Commissioner and the Central Vigilance Officer of EPFO and reminders on August 1 went unanswered.
In Budget 2015-16, the government decided to tax a part of provident fund. But widespread nationwide protests — some violent, especially in Bangalore — forced the government to rescind the decision.
The rainy day solution, hobbled by defaulting companies
Provident funds are meant to provide financial security to salaried employees, who must contribute 12 per cent of their monthly salary with the employer contributing 13.6 per cent.
Companies or institutions with more than 19 employees deposit the provident fund of each with the EPFO, which in turn deposits the money in an employee account that earns 8.8 per cent interest from the government, which invests the provident fund in government securities and corporate bonds.
While employees can withdraw the entire amount after retirement or two months after resigning from a job, the EPFO allows partial withdrawals to pay for a home, education, marriage or an illness.
Establishments that deduct contributions from employees’ salaries, but do not deposit it with EPFO are termed defaulters.