The Employees’ Pension Fund Organisation (EPFO) issued a circular on May 11, 2023, clarifying that eligible employees and pensioners are required to provide a written consent within a specified time limit to transfer or deposit the funds from their Employees’ Provident Fund (EPF) account to the Employees’ Pension Scheme (EPS) account.
According to the circular, eligible employees and pensioners have to explicitly provide written consent for the transfer to the EPFO within three months of being informed of the payable amount.
However, the circular has not mentioned what will happen if the written consent for transfer or deposit of additional funds is not provided by the employee or pensioner. Further, by not providing written consent within the three months, can it be said that the EPFO has sort of provided an exit window to the employees or pensioners if they do not want to continue with the higher EPS pension option?
When an employee/pensioner submits a joint application form on the Member Sewa portal, the amount that is required to be transferred or deposited by them is not known. The EPFO’s regional office will check the information submitted in the joint application form with the data available with them. If all the information is correct, then the EPFO will calculate the dues that are missing from the EPS account. These dues are either transferred from the EPF account or a provision is made for paying the additional amount into the EPS account. The transfer or deposit can be done by providing written consent in the prescribed manner.
ET Wealth reached out to the experts and asked if an employee not providing written consent will be considered as having exited from the higher EPS pension option. Here is what they have to say.
Puneet Gupta, Partner, People Advisory Services, EY: “The EPFO circular provides a time limit of 3 months for the pensioner/member employee to give consent for diversion of funds from the PF scheme to the pension scheme and to deposit the balance accumulations towards the Pension Scheme if sufficient balance is not available in the PF account. The circular does not provide that this time limit can be utilised for withdrawal of the joint option by pensioner/member employee. Thus, there is lack of clarity on what stand the EPFO may take in case the pensioner/member employee does not provide the consent or does not deposit the balance accumulations towards the pension scheme after filing the joint option application. The declaration to be provided by the pensioner/member employee in the online joint option application form has a clause which says that if the full amount payable is not deposited within the period as directed by EPFO, the joint option shall be liable to be treated as null and void. Hence, the EPFO could take a position to reject the joint option if the funds are not deposited.”
Radhika Vishwanathan from Deloitte Haskin Sells and LLP: “The circular mandates a written consent from the employee for diversion of dues from provident fund account to pension fund. This appears to be an additional requirement over and above the undertaking obtained as part of the joint option application, and hence potentially members could back out at this stage. While exercising the option for higher pension, one does not have visibility on the actual quantum of provident fund accumulations and interest that would be diverted to the pension fund. A member is better placed to decide on the higher pension option when the immediate financial impact (in the form of diversion from provident fund) is ascertained and, hence, it is only in the best interest to seek a second consent. In the absence of consent from the member, it may be concluded that the person is opting out. It may, however, be noted that written consent is sought only for diversion of funds; for deposit, the onus is on the individual.”
Source By: economictimes
