The Employees’ Provident Fund Organisation (EPFO) has approved a pilot project to automatically settle inoperative EPF accounts with balances of ₹1,000 or less, aiming to simplify the withdrawal process and ensure faster access to funds for members. Under the initiative, the unclaimed balances will be directly credited to members’ Aadhaar-seeded and EPFO-linked bank accounts without the need for submitting claims or paperwork.
The Ministry of Labour and Employment said that around 1.33 lakh inoperative accounts with a total balance of approximately ₹5.68 crore will be covered in the first phase of the reform.
The pilot project is designed to reduce procedural delays and make it easier for EPFO members to receive long-pending balances. According to the government, the funds will be automatically transferred to members’ bank accounts once they are verified through Aadhaar-linked details.
“In the first phase, around 1.33 lakh such accounts, amounting to nearly ₹5.68 crore, will be covered under this reform initiative. The amounts will be directly credited to members’ Aadhaar-seeded and EPFO-linked bank accounts without requiring fresh claims or documentation,” the Ministry of Labour and Employment said.
The government also indicated that the auto-initiation facility may be extended to accounts with balances above ₹1,000 in future phases, subject to the success of the pilot.
Under EPF rules, an account becomes inoperative if no contribution is received for a continuous period of three years after the member reaches the age of 55 or after retirement, whichever occurs later.
Additionally, according to EPFO’s Standard Operating Procedure issued on August 2, 2024, accounts that do not record any credit or debit for 36 months are classified as inoperative. Such accounts are automatically blocked to prevent unauthorized withdrawals.
Currently, members must undergo a verification and unblocking process before they can withdraw funds from these accounts. The new pilot initiative aims to bypass lengthy procedures for small balances, ensuring quicker settlements and improved service delivery.
Separately, the EPFO’s Central Board of Trustees has recommended an annual interest rate of 8.25% on employees’ provident fund deposits for the financial year 2025–26.
The decision, taken during a meeting chaired by Union Minister for Labour and Employment Mansukh Mandaviya, marks the third consecutive year that the retirement fund body has maintained the interest rate at 8.25%.
The EPFO’s pilot initiative to automatically settle small-balance inoperative accounts represents a step toward improving efficiency and member convenience in the provident fund system. If successful, the reform could be expanded to larger balances, further streamlining the process and ensuring that members receive their dues without unnecessary delays.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Published on: Mar 5, 2026, 2:17 PM IST
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