The EPFO has issued new guidelines to correct errors in EPS contributions. A clear process will now apply to cases of incorrect or incomplete pension contributions. This will reduce employee pension claim and record-related problems. Learn more.
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The Employees’ Provident Fund Organisation (EPFO) has issued new guidelines to address cases of incorrect or incomplete contributions related to the Employees’ Pension Scheme (EPS). This aims to correct pension records and simplify employees’ pension claims.
The EPFO stated that in several cases, employers have deposited EPS funds for employees who were not eligible for pension. In some cases, there were also employees who were eligible for pension but their EPS contributions were not deposited. These errors were causing persistent problems in processing pension claims.
Why the new system was necessary
According to the EPFO, these discrepancies in EPS contributions were causing difficulties for employees in processing pensions, adding service periods, and final settlements. These matters were being handled differently in different field offices, leading to confusion and delays. To address this, the EPFO has established a uniform and clear process.
What will happen to ineligible employees?
In cases where EPS contributions have been deposited for employees who are not eligible for pension, the EPFO will recalculate the incorrectly deposited amount. The interest declared by the EPFO will also be added.
In cases of non-exempted organizations, the entire amount will be withdrawn from the pension account (Account No. 10) and transferred to the Provident Fund account (Account No. 1). The pension service will be deleted from the employee’s record.
In cases of exempted organizations, the EPFO will transfer the incorrectly deposited amount, along with interest, to the PF Trust associated with Account No. 10, and the incorrect pension service will also be deleted from the employee’s account.
What will be the process for eligible employees?
If an employee was eligible for EPS but was wrongly excluded from the scheme, the EPFO will now determine the employee’s full outstanding EPS contribution, including interest.
In non-exempt organizations, this amount will be transferred from the Provident Fund account (Account No. 1) to the pension account (Account No. 10). The employee’s pension service period, and where applicable, the non-contributory period, will be added to their record.
In exempt organizations, the relevant PF trust will calculate the outstanding EPS amount, including interest, and transfer it to the EPFO’s pension account. The EPFO will then update the employee’s pension service record.
What the EPFO said about fund transfer and accounting
The EPFO has clarified that physical transfer of funds will be implemented where necessary to ensure accurate accounting. The organization states that the purpose of these guidelines is to protect employees’ pension rights and implement a uniform process across all field offices across the country.
What will employees benefit from?
EPFO believes that this move will significantly eliminate future pension benefit issues arising from EPS contribution errors. This will reduce the hassle for employees in settling their pensions at retirement, and their records will be more clear and reliable.
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