Getting your PF money in India is still one hell of a hassle

It should have taken 30 days for Sanjaya Kumar (27) from Odisha to withdraw his father's provident fund of Rs 40,000, the post-employment, rainy day retirement stash that companies must compulsorily deduct from salaries.

Instead, more than 1,825 days have passed since Kumar's father Krushna Chandra (53) died in 2011. "Please help me withdraw PF money, my mother is worried about losing it," said Sanjaya, in a complaint posted on an online forum.

More than 10,000 companies -- including 1,195 state-owned -- nationwide have defaulted on provident-fund payments: 2,200 companies owe at least Rs 2,200 crore-to the EPFO, the portion of employee salaries they should have deposited.

The numbers of defaulting companies and institutions is growing. There were 10,091 defaulters in 2014-15, rising to 10,932 by December 2015.

Online consumer forums are flooded with complaints like those of Kumar's, as hundreds of employees who have quit or retired from a company are deprived of their provident fund.

"We get lots of complaints from workers who have been denied their provident fund and also complaints of collusion between EPFO officials and employers," said All-India Trade Union Congress secretary and EPFO trustee D.L. Sachdev.

A detailed questionnaire sent on June 29, 2016, to the Central Provident Fund Commissioner and the Central Vigilance Officer of EPFO and reminders on August 1 went unanswered.

In Budget 2015-16, the government decided to tax a part of provident fund. But widespread nationwide protests -- some violent, especially in Bangalore -- forced the government to rescind the decision.

The rainy day solution, hobbled by defaulting companies

Provident funds are meant to provide financial security to salaried employees, who must contribute 12 per cent of their monthly salary with the employer contributing 13.6 per cent.

Companies or institutions with more than 19 employees deposit the provident fund of each with the EPFO, which in turn deposits the money in an employee account that earns 8.8 per cent interest from the government, which invests the provident fund in government securities and corporate bonds.

While employees can withdraw the entire amount after retirement or two months after resigning from a job, the EPFO allows partial withdrawals to pay for a home, education, marriage or an illness.

Establishments that deduct contributions from employees' salaries, but do not deposit it with EPFO are termed defaulters.

Tamil Nadu, including Pondicherry, has India's largest number of defaulting companies (2,644), followed by Maharashtra (1,692) and Kerala, including Lakshadweep (1,118).

The Airports Authority of India tops the list of defaulting institutions with a Rs-192-crore default, followed by HBL GLOBAL, Mumbai, and Ahluwalia Contracts India Limited, Delhi, with Rs 64.5 crore and 54.5 crore, respectively.

By region, Thiruvananthapuram leads with 247 defaulters, followed by Kolkata with 173 and Bhubaneswar with 115.

Companies that form their own provident-fund trusts for employees are exempt from signing up with the EPFO. In such cases, trustees are selected from company workers.

Defaulting companies must pay a penalty with an interest rate of between 17 per cent and 37 per cent, depending on the period of default.

EPFO set for a Rs 33-crore image makeover, but problems are deeper

The EPFO is set for a Rs 33-crore image makeover, which includes professional social-media management and advertisements in print and broadcast media, Mint reported on July 5, 2016.

But the EPFO'S role as a custodian of employee savings faces deeper problems: it does not tell employees that companies are defaulting until they come to settle; cases waiting for settlement are rising; and corruption with the organisation endures.

The number of EPF cases pending settlement in 2015-16 increased 23 per cent over the previous year. Although 228 police cases were registered, 14,000 inquiries started against defaulting establishments and Rs 3,240 crore was recovered in 2014-15 from defaulters, the EPFO was short of 6,000 employees on March 31, 2015. Fewer employees affect the organisation's ability to enforce provident-fund rules.

There has been a four-fold increase in cases filed by EPFO to prosecute defaulting employers over the four years ending 2015, from 317 in 2012-13 to 1491 in 2014-15.

As many as 322 corruption cases were ongoing or concluded against erring EPFO officials between 2012-February 2015. Since then, corruption cases have dropped: 167 in 2012, 75 in 2013, 72 in 2014 and 8 till February 2015.

One reason could be that an EPFO executive officer was previously given charge of an area to ensure employers within that jurisdiction did not default.

"Now notices to defaulters are sent from the Head Office, and there is no officer who can be held responsible if the company defaults in payment," said Vivek Kumar, a former EPFO director of vigilance.

Back in Hyderabad, the reasoning makes no difference to Sanjaya Kumar.

By Nikhil M Bahu