- Human Resource
Provident Fund - Procedures, Problems and Solutions
This is a part of a series of articles by Mr. Bala Murugan where he explains and simplifies the salient features of THE EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952.
To recap.......This act is an important piece of Labour Welfare legislation enacted by the Parliament to provide social security benefits to the workers. At present, the Act and the Schemes framed there under provide for three types of benefits -
1. Contributory Provident Fund,
2. Pensionary benefits to the employees / family members and
3. Insurance cover to the members of the Provident Fund.
The object of the Act in 1952 was the institution of the compulsory contributory Provident Fund to the employees to which both the employee and the employer would contribute. The Employees' Provident Fund Scheme was accordingly framed under the Act and it came into effect from 1-11-1952. Initially the title of the Act was, "The Provident Fund Act 1952".
Provident Fund Transfer:
A resigned employee who joins another company is left with an option of transferring the PF monies from his previous PF account to the current PF account, by filling the Form 13.
l When an employee joins a new company and he wishes to transfer his previous company provident fund amount, he should inform the HR department or Accounts department of the new company.
1. The employer will issue Form 13, in which the member has to fill the details of the previous company like - name, address, provident fund account number and address of the provident fund office where the account was held.
2. On form 13, the signature of the previous employer is not required.
3. Once he fills the required details and submits it to the current employer, the current employer will forward it to the provident fund office for the transferring process.
4. The time taken for transferring the fund from one account to other account normally takes about 40 days from date of submission.
Problems Faced in withdrawing / transferring Provident Fund monies and the remedies:
On many occasions, members face problems in withdrawing the provident fund monies. Some of the normal reasons for the problems and the solutions to overcome these are quoted here below:
Mismatch of Signature of the employer:
Employer should inform the PF office through a formal letter authorizing the signature of the concerned authority. If the PF officer is still not convinced with this letter, a fresh application has to be submitted again.
Mismatch of Signature of the member :
If the signature mismatches or they have changed their signature, they need to inform the provident fund office through their employer. If the PF officer is still not convinced with this letter, a fresh application has to be submitted again.
Mismatch of Provident Fund Account number of the member:
If the PF Account number has been mentioned wrongly by the member, then the application will be returned back to the employer. The employee has to correct the details and get it counter-signed by the employer.
If the PF Account number has been reported wrongly by the employer in their annual return, then it needs be corrected through a formal letter to the PF department explaining the problem and correcting the same.
Incorrect bank account details furnished by the member:
The correct details with regard to account number, name of the bank, branch address, MICR code of the bank (MICR is a 9 digit number printed on the cheque leaf, next to the cheque number) have to be filled in again and re-submission required.
Incorrect address given by member:
The correct details have to be filled in again and re-submission required.
Mismatch of date of joining / resignation:
If the date of joining / resignation has been mentioned wrongly by the member, then the application will be returned back to the employer. The employee has to correct the details and get it counter-signed by the employer.
Communication from PF department while processing the request would not have reached the employer :
The employer / employee needs to check with the PF office and find out the reason for not receiving the communication. If not traceable, then a request has to be made to the PF office for re-sending the communication.
Failure of employer to remit the PF amount recovered from members to PF Account:
It is the duty of the employer to remit the PF monies (which are recovered from employees) to the authorised banks for the credit of PF department. It is a statutory violation if the recovered monies are not remitted on time.
If the employee comes to know that the employer has not remitted the PF monies that are recovered from him, then he can lodge a complaint to the PF office against the employer insisting for the recovery.
Member might have changed his / her official name and the same has not been informed to the provident fund office:
If the employee has changed his / her name and the same has not been informed to the PF office, then the application will be rejected when the PF office compares the data with the returns being filed by the company. In such a situation, the concerned employee has to request through a formal letter informing about the change in name and also, attach the notification copy of the Gazette publication.
Change in Authorised Signatory of the employer when the application is in process:
Sometimes, the authorized signatory would have been changed when the application is in process and it would lead to rejection of the application. In such a situation, the employer has to get the application re-signed by the concerned authorized signatory who is active at the appropriate period of time.
Problem during Transfer of Monies:
In the case of transfer and when the previous employer is an exempt establishment (which means, having own PF trust), the procedure is that the current employer should forward the transfer form (Form 13) to the previous employer who will process a cheque (after validation) in favour of PF office of the current employer and it will be sent to the current employer. It becomes the responsibility of the current employer to submit the cheque along with a request letter to the PF office for transferring the monies. Here, the normal problems that might occur are:
1. previous employer might have changed their address
2. Documents lost in transit / do not reach the concerned department
3. delay in processing the application for reasons like tedious internal processing procedures, processing person is on vacation / busy on some other assignments, signatory not available etc
Note: In all the above situations, the employee is required to be in contact with his employer regularly and chase them constantly which will speed up the process.
Bala Murugan V CFO Cogzidel Consultancy Services Pvt Ltd E-mail :firstname.lastname@example.org www.cogzidel.in
Issue BG97 April09