Rejection of final EPF claims sees surge in 5 years, up from 13% to 34% | India News

👉🏼 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.

Official data show that 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, while 46.66 lakh were settled and 2.18 lakh remained as closing balance. This has been sharply higher than the rejection rate seen in 2017-18 and 2018-19, which stood at around 13 per cent and 18.2 per cent, respectively. The rejection rate, calculated as a percentage of rejected claims out of total applications for claims, increased further to 24.1 per cent in 2019-20 and 30.8 per cent in 2020-21 for final settlement claims. In 2021-22, the rejection rate for final settlement claims increased to 35.2 per cent.

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, EPFO, told The Indian Express.

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.

According to the minutes of a CBT meeting held in July 2022, the pain points for the pensioners were identified as lack of information on expected pension amounts, limited choice of banks for pension receipts, updation of life certificate, complex processes leading to high claim rejection and delay in claim settlement on superannuation.

The retirement fund body of EPFO has over 29 crore total subscribers, out of which around 6.8 crore are active contributing subscribers.

In response to specific queries by The Indian Express regarding the rise in rejection rates from 18 per cent in the pre-pandemic year to over 33 per cent in 2022-23 and the Kerala suicide incident, the EPFO said “it is a customer-centric organisation” and that “it continuously strives to improve its service delivery, adding that it has increased its membership by 5.11 crores between FY 2019-20 and FY 2022-23”.

“Following the mantra of ‘Ease of living’, the claim filing has been made easier and liberal. While the number of claims has almost doubled to 5.77 crores since then, the present return rate of ineligible claims has also declined. About 99% claims are being settled within the statutory time limit, an increase of 10 percent point. Due importance is being given to redressal of grievances, wherein on CPGRAMS, the redressal time has halved from 2 weeks to 1 week. EPFO is continuously engaging with the establishments to facilitate the members so that they file eligible claims with proper KYC,” the EPFO said in its response.

On the incident of the member dying by suicide at the EPFO premises in Kerala, the EPFO said it has initiated an “administrative inquiry to ensure thorough investigation”. “The organisation remains vigilant, continuously monitoring and enforcing timely claim settlements. This commitment reflects EPFO’s dedication to maintain high standards of efficiency and accountability in its operations,” it said.

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.

This compares with a total of 4.82 crore claims of final settlement, transfer and part withdrawals in 2021-22, out of which 1.25 crore or 25.9 per cent claims were rejected, 3.49 crore or 72.4 per cent claims were settled and 8.46 lakh or 1.8 per cent claims remained as closing balance.