EPFO alert! How to avoid, deal with rejections, delays

From incorrect pension enrolments to delays in withdrawals, Desai’s experience sheds light on complexities and frustrations of managing PF accounts. Despite following procedures, she was left battling a maze of errors, rejections, and costly delays—all while her hard-earned savings remained out of reach.

And, this is not an isolated incident. Many employees grapple with similar issues, as a lack of clarity and transparency, cumbersome processes, and administrative errors complicate what should be straightforward transactions.

Desai’s story began when her first employer mistakenly enrolled her in the Employees’ Pension Scheme (EPS), despite her being ineligible. This error set off a chain of events that made her attempts to transfer or withdraw the PF a nightmare when she switched jobs.

Desai first tried to withdraw the PF amount when she joined her second job, an exempted organization, which managed their employee PF within the ambit of Employees' Provident Fund Organisation rules and regulations, but her application was rejected. It was then that she realised the error.

After working for four months with her second employer, Desai switched to freelancing as an independent financial consultant with an insurance company. But unfortunately, the firm she was freelancing with, enrolled her as a full-time employee. She discovered it only when she approached the EPFO again to withdraw her PF from her first employer. Though she was allowed by the EPFO to withdraw her PF from the second organization, her PF from the first employer was still stuck.

She was told that she could transfer her PF to the third employer but can’t withdraw the amount till the EPS issue was resolved. "I was appalled. First, I got the EPS balance transferred to my PF account. The EPFO required an undertaking that I would forego interest on EPS contributions when the transfer happens. Once the EPS issue was settled, the funds were transferred to the so-called third employer’s PF account."

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But her troubles did not end there. The EPFO did not allow her to withdraw funds from the third organization as the employer had not made any contributions to the new PF account. "How could there be any contributions when I wasn't drawing a salary? I pestered the third employer to send a letter to EPFO about the mistake. Despite sending it multiple times, the EPFO kept rejecting my withdrawal requests. Lakhs of money was involved, and I was losing interest on it. In the end, I paid an agent to get it done. It took me 2.5 years."

Experts said the system’s rigid structure also leaves workers in a frustrating limbo unable to access funds when they need them the most. "Even physical visits don't provide relief given the nature of the organization," said Vishwanath B.G., associate director at tech-driven HR solutions firm Mercer.

The EPS dilemma

Two issues are linked to EPS. First, EPFO manages contributions to EPS for exempt and unexempt employers.While EPS funds can be transferred, the amount cannot be withdrawn.

"Many employees withdraw or transfer PF but do not consolidate the EPS. In the exempted scenario, if the pension is not consolidated, the EPF transfer or withdrawal is still possible, provided all credentials are correct. For the unexempted, however, if PF has been withdrawn without transferring EPS amount, EPS contribution alone can’t be transferred, leading to a dead-end situation," Vishwanath said.

However, the second issue is more complex. From 1 September 2014, any new employee joining an establishment and drawing a basic wage of more than ₹15,000 per month is eligible only for the employee provident fund (EPF). This means that the full 24% (12% each by the employee and the employer) PF contribution is retained in the PF account. In case of a continuous service, the EPS contributions continue even if your basic pay goes above ₹15,000. However, if you withdraw your PF from the previous employer, you will be considered a new employee, irrespective of the previous EPS contributions. If EPS contribution is made in this situation, EPFO will ask questions when you try to withdraw it. Besides, to withdraw EPS contributions, one must first transfer the amount to a current PF account. However, the EPFO might also ask you to forgo the interest on it.

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“We recommend employers ensure the completion of Form-11 for PF/EPS enrolment and inform staff about its significance for the EPFO deliverables. It is crucial to verify the accuracy of the Universal Account Number (UAN) and KYC details before hiring employees. It will ensure employees enjoy continuous service benefits and face no difficulty in transferring past PF accumulations. It will also help avoid imposition of interest and penalties for late deposit of PF/EPS dues with EPFO," said Anurag Jain, co-founder and partner at tax consultancy ByTheBook Consulting.

UAN challenges

Mumbai-based Abhishek Kulkarni, faced a seemingly simple task—transferring his PF online. He assumed an active UAN would suffice but found he had to manually input all details of his previous and current employers. “If my UAN is active and contributions were made under it, why doesn’t it reflect in my records?" he asked.

Here’s what happened: For exempted organizations, records don’t appear on EPFO’s website. “Both my employers were exempted. It’s hard to confirm if the transfer actually happened since the PF deposit statements don’t show up online," Kulkarni said.

Vishwanath acknowledged the issue. “EPFO made provisions where transfer can be initiated online whether it is an exempted or an unexempted establishment, but employees need to contact his previous employer to find out if it has happened or not." Besides, EPFO has stopped entertaining offline transfer and withdrawal requests, challenging those unable to sign in online.

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Additionally, name mismatches are also common. “EPFO relies on accuracy of basic data that employees must enter themselves. Employers play a key role in verifying this information in the EPFO portal via Form 11 and by uploading KYC documents like PAN, Aadhaar and bank account details linked to the UAN," said Adarsh Vir Singh, founder of social-security consulting firm Nidhi Niyojan Inc. "Any inaccuracy in names, parentage, spouse details, or date of birth during onboarding can halt the entire process at the EPFO," he added.

Resolving EPF issues

To address legacy-related corrections, EPFO has strengthened its procedures by issuing SOPs for online submission of joint declaration forms. The forms, which must be filled out by both the employer and the employee, may however still require employees to meet with regional PF commissioners. "The corrections are crucial as they can significantly impact claim settlement timeline, reduce rejections and streamline service delivery," said Singh.

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EPFO is supposed to resolve queries within 20 days, and if it takes longer an employee can lodge a complaint on the Centralized Public Grievance Redress and Monitoring System, linked to central and state ministries. Complaints can also be escalated to the Directorate of Public Grievances. “This will move your complaint to the Prime Minister’s Office, and the inquiry would go to the respective EPFO officer ensuring faster resolution," Vishwanath said. “There is little accountability to resolve common issues like name mismatches or overlapping service periods, and can take more than a year to resolve," he added.

Moreover, EPFO must improve its website to make it more user-friendly and consolidate records across its offices nationwide.