AA Edit | EPFO Reforms Are Welcome

The Employees’ Provident Fund Organisation (EPFO), the country’s largest retirement fund manager, will finally get a modern makeover after the much-awaited reforms are operationalised.

Almost every person working in a private company in India will have to contribute a part of his income to create a retirement corpus. Most of this money is parked in EPFO, an autonomous organisation under the labour ministry, as it is a statutory obligation on every employer. As EPFO has a near monopoly over the workers’ retirement corpus, it has been slow to change and reform for decades.

However, this organisation, which manages nearly Rs 25 lakh crore of its seven crore subscribers, has begun to change, albeit slowly. Over a decade after the introduction of Universal Account Number (UAN), the state-owned retirement fund manager has proposed to simplify the withdrawal of funds — as allowed under the EPFO rules — through an exclusive ATM card or UPI transfer. It also proposed to increase the limit for automatic withdrawal approval from Rs 1 lakh to Rs 5 lakh.

Currently, funds could be withdrawn from an EPFO account by transferring money into the subscriber’s bank account, which involves a small amount of back-office work. However, by enabling the direct withdrawal of money directly from the EPFO account, the fund transfer will get easier, if the withdrawal is less than Rs 5 lakh and is within the EPFO withdrawal limits.

While the EPFO is moving in the right direction, the big question remains as to whether it reflects the changing nature of society. Though the safety of funds must be the top priority, isn’t it depriving young workers, whose risk-taking ability would be higher in the initial stages of professional life, of higher returns by offering a plain-vanilla product to every subscriber? Isn’t that a disservice to its subscribers? Perhaps, an introspection is due at the EPFO.