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Organised private sector workers may soon be able to maintain their retirement savings while changing jobs because the Employees' Provident Fund Organisation is close to finalising a plan to provide portable account numbers.
The EPFO has dumped its earlier plan of providing a separate unique number to each of its 48 million subscribers. It will instead allow the subscribers to tag the provident fund accounts with their existing permanent account number, unique identification number or national population register number.
A high-powered committee, headed by the Central Provident Fund Commissioner RC Mishra and comprising senior officials from the Unique Identification Authority of India and the ministries of information technology and labour, is in the process of shortlisting a consultant to implement the initiative. "The broad contours of the proposal have been finalised by the committee. We are hopeful that all required infrastructure would be in place within the next few months and the project can be implemented by the beginning of the new fiscal," said an official who did not wish to be named.
The portable number will not just help employees retain their accounts when they change jobs but also serve as the reference number for claiming pension and other related benefits. The EPFO wants to give employees an option of choosing between three existing unique numbers so that no subscriber gets left out. "There may be many that have just one of the three. By giving a choice, we will ensure that all our subscribers get covered. Gradually, we may move to just one number," the official said.
Once a consultant is appointed, the EPFO will follow its advice for business process re-engineering to redesign the workflow within the organisation. "All existing PF numbers will have to be replaced by the portable number. Employers will be able to do it on their own online. We will develop a software for that," the official said. The EPFO plans to implement the initiative straightaway by using the best software. The project will cost the government about . 200 crore, an amount that the EPFO says is a pittance compared with the savings that it will lead to.
"More than 80% of our workload would come down as we do not have to spend time towards claim settlement. We could channelise this time towards other work and make the office more efficient," the official said.
The EPFO hopes that cases of premature withdrawal will recede once the portable number is implemented. In a pilot study conducted at its Karnal office, it found that over 30.2% subscribers withdrew their PF within a year of joining service while 54.3% did so by the end of the second year. This happens because employees find withdrawal of PF money an easier option than getting their accounts transferred once they change jobs. All this is going to change soon.
The organisation processes more than six million claims every year. It manages over . 3,00,000 crore of employees' deposits and receives incremental deposits ranging between . 25,000 crore and . 30,000 crore every year.
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