EPFO reforms: Getting PF dues shouldn’t require special services
The fact that a fintech service industry has sprouted to help people get their provident fund (PF) claims met reflects poorly on the Employees’ Provident Fund Organization (EPFO). India’s state-run retirement fund needs a big leap in subscriber orientation.
The Employees’ Provident Fund Organisation (EPFO) is undergoing reforms. In the latest instance, the state-backed retirement fund manager has instructed its offices not to reject claims of subscribers just because of an overlap in their employment spans between employers. Dates of when a job is given up and the next taken could get mixed up in the records; employees who avail their unused leave at the end of a work stint to join another company, for example, could face this hazard without realizing it.
Data-entry errors of this kind should not make subscribers run from pillar to post to get their retiral dues, especially not after they’re past their salaried years. It’s welcome, therefore, that the EPFO is trying to fix this bug. But this is only one of the many problems that could make the withdrawal of one’s provident fund (PF) seem like a hurdle race with no finish line.
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To be sure, the Organization has been easing access to funds. A facility to let subscribers withdraw money from ATMs up to certain limits, for instance, is in the works. Doing away with the need for employers to endorse the linking of bank accounts is another.
That said, the scale of reforms needed is such that the changes made so far seem incremental at best. Appallingly, a very high proportion of claims get rejected every year for various reasons, from spelling mismatches in names to bank accounts not being linked and the PF savings of past jobs not having been transferred. These lapses are rarely the fault of PF savers themselves, since they typically rely on employers to keep their retiral kitty in order.
But the numbers are large, with over a quarter of all claims rejected, and the complexity of what it takes to spot bugs and sort out records is so daunting that a market has arisen for PF consulting services.
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As detailed by a Long Story in Mint on Monday, an industry has sprouted around solving problems faced by EPFO subscribers. Startups have sprung up in cities such as Mumbai and Bangalore that offer to help people get their money in lieu of a fee. This fee could be a fixed amount (say, ₹10,000 per case) or a proportion of the funds at stake (going up to 5% of the PF corpus). Since these firms are merely trying to profit from an identified need and claim recoveries that run into hundreds of crores, their existence is not scandalous.
But what does it say of how the EPFO operates? For all its subscriber-friendly steps, the fact that such an industry exists is proof that securing PF money is too much of a rigmarole in far too many cases. This reflects poorly on PF processes in today’s day and age, with internet interfaces having cut intermediaries out of the loop in most spheres. If people need special services for access to their own nest eggs, the retirement fund body clearly needs a big leap in subscriber orientation.
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While customer satisfaction surveys may help spot specific pain-points, the empathy that must fuel that effort is elementary. Money saved up in a PF account over the length of a career is a sum that retirees count on for living expenses and big-ticket payments.
As the custodian of these mandatory savings, the EPFO must tackle any subscriber uncertainty over access to them. Unlike a bank, it cannot suffer a ‘run’ on its accounts, but it must always keep customer confidence firmly in focus. If PF records are riddled with bugs that can block payouts, it should take the initiative to debug them by reaching out for clarity.
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