EPFO rejections: Out of the three PF claim categories – final settlement, transfer and withdrawal – the rejection rate has sharply increased for the final settlement of PF claims over the last five years.

KP Sivaraman, a retired employee of a tyre manufacturing company, made multiple visits over the last nine years to the Kochi office of the Employees’ Provident Fund Organisation (EPFO) to get his final PF dues. Earlier this month, he died by suicide after consuming poison inside the EPF office. The PF amount due to him had been rejected because of a mismatch in the identification details in his PF records and his official documents.


Mumbai-based EPF retiree’s daughter, Deepti D, has been flagging the issue of her father’s final settlement claim which has been shown as settled on the online portal, but the amount is neither reflected in his passbook nor in his bank account.


R Saha, a Kolkata-based EPF subscriber, applied for part-withdrawal four months after being unemployed, but the application kept getting rejected on grounds of data mismatch.

Rejection rates of EPF final settlement have been surging, up from around 13 per cent in 2017-18 to nearly 34 per cent in 2022-23, which translates into over one in every three claims for final settlement of provident fund amount made by the members being turned down by the EPFO.

Out of the three PF claim categories – final settlement, transfer and withdrawal – the rejection rate has sharply increased for the final settlement of PF claims over the last five years. According to EPFO officials, the key reasons for rejection are a complete shift to the online system for processing claims. Earlier, according to them, the verification of documents for claims would take primarily at the employers’ end and then would come to EPFO, which has now been majorly linked to Aadhaar and 99 per cent claims are through the online portal.


Earlier, the document verification for claims was done offline. However, the procedure has now been linked to Aadhaar and the entire process has been shifted online. 

Out of the total 73.87 lakh claims received for final PF settlement in financial year 2022-23, 33.8 per cent (24.93 lakh) were rejected. At the same time, 46.66 lakh were settled and 2.18 lakh remained as closing balance, shows official data.

This was considerably higher than the rate of rejection in 2017-18 and 2018-19, when it stood at nearly 13 per cent and 18.2 per cent, respectively.


The rate of rejection, in percentage terms of rejected claims out of total applications for claims, jumped further to 24.1 per cent in 2019-20 and 30.8 per cent in 2020-21 for final settlement claims.

Moving to 2021-22, the rate of rejection for final settlement claims rose to 35.2 per cent i.e., more than one-third of the total number of claims that the pension body received.





Working under pressure

Meanwhile, officials from the Employees’ Provident Fund Organisation (EPFO) in October last year had expressed their concern about being under “extreme pressure" . This pressure stems from the recent reversion to manual annual account updates by the EPFO, while they are held accountable for any delays in claim settlements beyond the stipulated 20-day timeframe.


Announcement of interest

Additionally, the Central Board Trustees EPFO on Feb 10 recommended an annual rate of interest of 8.25 per cent to be credited on EPF accumulations in members’ accounts for the financial year 2023-24.

The Board also recommended a distribution of income of ₹1,07,000 crores to EPF members’ accounts on a total principal of around ₹13 lakh crores. The total income recommended for distribution was the highest so far.


The rise in rejection rate of claims has been cited in several meetings of the Central Board of Trustees, EPFO, two former Board members said.

Earlier also, we had pointed out that the number of rejections are going up. It has increased much after workers started to submit their applications online. Earlier, somebody in the EPFO’s helpdesk would correct it. We have been pointing this out in meetings several times. The system has become such that after a few days, claims are returned citing discrepancies. Many of these discrepancies are nowadays on account of just an alphabet in the name of the member not matching, or different details in Aadhaar. All of this creates a lot of problems for the EPF subscribers. There should be a system to correct the mistakes. This has been pointed out earlier in Board meetings on many occasions,” a former member of the Central Board of Trustees,

In the CBT meeting held in October 2022, the major causes of customer dissatisfaction were recorded to be non-transfer of PF accumulations, KYC-related issues of subscribers pertaining to PF office, amount not credited in bank account after claim settlement, claim rejected more than once, non-settlement of PF advance claims, delay in PF withdrawals, and passbook-related issues including amount not shown in passbook.


Conclusion

Overall, the EPFO had processed more than 5 crore claims during 2022-23 with claim payments of over Rs 1.5 lakh crore, according to official records. In 2022-23, claims for final PF settlement, transfer claims, and part withdrawal claims totalled 5.21 crore in number. Out of this, 1.34 crore or 25.8 per cent claims were rejected, while 3.77 crore or 72.4 per cent claims were settled. About 9.38 lakh or 1.8 per cent claims remained as closing balance.