One of the most secure ways to put money away for your retirement is your Employees’ Provident Fund (EPF) account. However, few people have been disciplined enough to invest in it with a long-term perspective, especially due to how easy it is to make withdrawals every time you switch jobs. Painful delays cause people that do not withdraw their corpus to postpone or forget any decision on their previous EPF accounts. But ever since the Prime Minister inaugurated provident fund portability through the Universal Account Number (UAN), things are all set to make a change.
Why there was need for change
Under this provident fund portability through UAN, employees will have a single account within which they can accumulate all their EPF money even when they switch jobs. Until now, investors had to change their EPF account every time they changed jobs and get the money transferred from the previous one to the new.
Due to delays and a provision which allowed employees to withdraw their EPF in case of two months of unemployment, most chose to withdraw their money. There was no way for the authorities to track employees when they switched jobs since the EPF system recognizes them through their employer. But with the onset of the UAN, employees will be identified uniquely, and the intermediation of the employer will be redundant.
Here is how to go about acquiring your UAN and how to use it.
Who is eligible for UAN
According to the Employees’ Provident Fund Organization (EPFO), UAN has been allocated to all employees who have been in service as of 1 January 2014, namely to 41.7 million members. Employers will receive the UAN, which they will then communicate to their employees. To check if you have been allotted a UAN, you can visit the EPFO’s website and key in your EPF number.
You could ask your employer for the number who might take your know-your-customer (KYC) details down, enter it into your UAN, and have it verified it through a digital signature. You could also upload your KYC details directly after having the same verified by your employer.
How to activate your UAN
This is the next step: activating your UAN. Visit the website, enter in your UAN, your member ID and your mobile phone number. You will receive a one -ime password (OTP) for security reasons. Once you enter that, you will see your EPF passbook updated as on date, and will even be able to add your previous accounts into this UAN.
According to K.K. Jalan, Central Provident Fund Commissioner, employees will be able to bring their past account under one umbrella UAN, but will need to transfer money from their past accounts. To do this, they may use the online transfer claim portal facility (OTCP).
How to transfer funds
To transfer funds, employees have to visit www.epfindia.com and click on the OTCP link under the ‘for employees’ section. Eligible employees will need to register online first and then fill up the transfer claim form. Details to fill in include past and current employers, EPF account details and bank account details. Keep in mind that the form will have to be attested by any of the employers whose digital signature is registered with the EPFO.
Employees will also be required to take a print out, sign and submit the form to the employer they chose for attestation. While this is not a compulsory step, the employer in question may require it for their records and might not verify your details until you have submitted the form. With OTCP, the EPFO is planning to settle claims in 10-12 days.
Why is the UAN helpful?
Account portability is one of the biggest advantages of UAN. However, for that to be able to work, employees must give their KYC details for the EPFO to be able to identify them, irrespective of their employer. The KYC details can either be uploaded or given to the employer. The Aadhaar Number or Permanent Account Number (PAN) and bank account details are mandatory. Once the same have been verified, the account will become portable.
So the next time an employee changes their job, all they need to do is submit their UAN to the new employer, who will proceed to verify the KYC details and begin to contribute money into the same account. Employees will also be able to stay updated as they will receive an SMS on their registered mobile phones every time a transaction takes place.
Older accounts not eligible for UAN yet
While the UAN has been allotted to those employees who have an active EPF account from January 2014, older accounts still aren’t eligible for this facility just as yet. UAN for older accounts are said to be application-based, wherein an employee will be required to apply for UAN. According to Jalan, it the facility should be available in 10-15 days and an employee will be able to get UAN within 24 hours from application.
EPF account numbers are said to continue for the moment, despite the allotment of the UAN. Jalan said that the idea was to focus on the employee and permit portability, which the UAN allows. In time, EPF account numbers will be done away with, but not immediately.