Govt rules out using unclaimed LIC, EPFO funds for other purposes
The government told the Lok Sabha there is no proposal to divert unclaimed LIC funds or EPFO inoperative account money. It said the existing transfer and settlement mechanisms will continue while outreach to claimants is stepped up.
The government has clarified that it has no proposal to use unclaimed money lying with the Life Insurance Corporation of India (LIC) or inoperative Employees' Provident Fund Organisation (EPFO) accounts for any purpose other than the existing mechanism.
The clarification came in a written reply in the Lok Sabha by Minister of State for Finance Pankaj Chaudhary amid questions over whether thousands of crores lying unclaimed with LIC and EPFO could be diverted for other uses.
The minister said that under the Insurance Regulatory and Development Authority of India (IRDAI) Master Circular issued on June 19, 2024, insurance amounts that remain unclaimed for more than 10 years are transferred to the Senior Citizen Welfare Fund (SCWF). He added that there is currently no proposal to alter this mechanism or utilise the money for any other purpose.
WHAT HAPPENS TO UNCLAIMED LIC MONEY?
According to the government, LIC was holding unclaimed amounts worth Rs 7,318.50 crore as of March 31, 2026.
Of this, Rs 5,564.55 crore belongs to policyholders and beneficiaries.
Rs 1,753.95 crore is income that has accrued on those unclaimed amounts.
If the amount remains unclaimed for more than 10 years, it is transferred to the Senior Citizen Welfare Fund under the existing rules. The latest clarification makes it clear that the government does not intend to use these funds for any other purpose.
WHAT ABOUT EPFO MONEY?
The government also made an important clarification regarding EPFO.
It said there are no "unclaimed" EPFO accounts.
Instead, there are "inoperative" EPF accounts. These are accounts that have not seen contributions for a long period but still belong to their respective members.
As of March 31, 2026, inoperative EPF accounts held Rs 9,330.56 crore.
The clarification is significant because these accounts are not treated as government-owned money and continue to belong to EPF subscribers until they or their nominees claim the amount.
HOW IS LIC TRYING TO TRACE POLICYHOLDERS?
The government said LIC has stepped up efforts to help policyholders and nominees claim their money.
Policyholders can search for unclaimed amounts through LIC's official website.
Apart from this, LIC has been reaching out to customers through letters, SMS, local agents, Bima Sakhis and even credit bureau agencies to locate policyholders and nominees.
The insurer has also participated in the Finance Ministry's "Your Money-Your Right" campaign and has been running awareness advertisements across the country in multiple Indian languages to encourage people to check whether they have any unclaimed money.
EPFO PLANS AUTOMATIC SETTLEMENT
The government also highlighted a new initiative aimed at making it easier for EPF subscribers to receive money lying in inoperative accounts.
EPFO has categorised inoperative accounts based on their Know Your Customer (KYC) status.
A pilot project has now been approved for the automatic settlement of Aadhaar-verified inoperative EPF accounts with balances of up to Rs 1,000.
Under this system, the money will be credited directly to Aadhaar-linked bank accounts without requiring subscribers to submit fresh claims or additional documents.
The government said this model could later be expanded to accounts with higher balances after completing due diligence.
Apart from the automatic settlement initiative, EPFO is also trying to reconnect with members through social media campaigns and its Nidhi Aapke Nikat (NAN) 2.0 outreach programme.
These initiatives are aimed at helping members identify dormant accounts, update their details and claim money that still belongs to them.
WHAT THIS MEANS FOR POLICYHOLDERS AND EPF MEMBERS
The government's clarification puts to rest speculation that unclaimed LIC or EPFO money could be diverted for other purposes.
Instead, the focus remains on helping policyholders, EPF subscribers and their nominees trace these funds and complete the claim process.
At the same time, the latest figures show that more than Rs 16,600 crore is lying either as unclaimed insurance money or inoperative EPF balances, underlining the need for people to regularly check old insurance policies and provident fund accounts to ensure their savings do not remain unattended.
The government has clarified that it has no proposal to use unclaimed money lying with the Life Insurance Corporation of India (LIC) or inoperative Employees' Provident Fund Organisation (EPFO) accounts for any purpose other than the existing mechanism.
The clarification came in a written reply in the Lok Sabha by Minister of State for Finance Pankaj Chaudhary amid questions over whether thousands of crores lying unclaimed with LIC and EPFO could be diverted for other uses.
The minister said that under the Insurance Regulatory and Development Authority of India (IRDAI) Master Circular issued on June 19, 2024, insurance amounts that remain unclaimed for more than 10 years are transferred to the Senior Citizen Welfare Fund (SCWF). He added that there is currently no proposal to alter this mechanism or utilise the money for any other purpose.
WHAT HAPPENS TO UNCLAIMED LIC MONEY?
According to the government, LIC was holding unclaimed amounts worth Rs 7,318.50 crore as of March 31, 2026.
Of this, Rs 5,564.55 crore belongs to policyholders and beneficiaries.
Rs 1,753.95 crore is income that has accrued on those unclaimed amounts.
If the amount remains unclaimed for more than 10 years, it is transferred to the Senior Citizen Welfare Fund under the existing rules. The latest clarification makes it clear that the government does not intend to use these funds for any other purpose.
WHAT ABOUT EPFO MONEY?
The government also made an important clarification regarding EPFO.
It said there are no "unclaimed" EPFO accounts.
Instead, there are "inoperative" EPF accounts. These are accounts that have not seen contributions for a long period but still belong to their respective members.
As of March 31, 2026, inoperative EPF accounts held Rs 9,330.56 crore.
The clarification is significant because these accounts are not treated as government-owned money and continue to belong to EPF subscribers until they or their nominees claim the amount.
HOW IS LIC TRYING TO TRACE POLICYHOLDERS?
The government said LIC has stepped up efforts to help policyholders and nominees claim their money.
Policyholders can search for unclaimed amounts through LIC's official website.
Apart from this, LIC has been reaching out to customers through letters, SMS, local agents, Bima Sakhis and even credit bureau agencies to locate policyholders and nominees.
The insurer has also participated in the Finance Ministry's "Your Money-Your Right" campaign and has been running awareness advertisements across the country in multiple Indian languages to encourage people to check whether they have any unclaimed money.
EPFO PLANS AUTOMATIC SETTLEMENT
The government also highlighted a new initiative aimed at making it easier for EPF subscribers to receive money lying in inoperative accounts.
EPFO has categorised inoperative accounts based on their Know Your Customer (KYC) status.
A pilot project has now been approved for the automatic settlement of Aadhaar-verified inoperative EPF accounts with balances of up to Rs 1,000.
Under this system, the money will be credited directly to Aadhaar-linked bank accounts without requiring subscribers to submit fresh claims or additional documents.
The government said this model could later be expanded to accounts with higher balances after completing due diligence.
Apart from the automatic settlement initiative, EPFO is also trying to reconnect with members through social media campaigns and its Nidhi Aapke Nikat (NAN) 2.0 outreach programme.
These initiatives are aimed at helping members identify dormant accounts, update their details and claim money that still belongs to them.
WHAT THIS MEANS FOR POLICYHOLDERS AND EPF MEMBERS
The government's clarification puts to rest speculation that unclaimed LIC or EPFO money could be diverted for other purposes.
Instead, the focus remains on helping policyholders, EPF subscribers and their nominees trace these funds and complete the claim process.
At the same time, the latest figures show that more than Rs 16,600 crore is lying either as unclaimed insurance money or inoperative EPF balances, underlining the need for people to regularly check old insurance policies and provident fund accounts to ensure their savings do not remain unattended.
The government has clarified that it has no proposal to use unclaimed money lying with the Life Insurance Corporation of India (LIC) or inoperative Employees' Provident Fund Organisation (EPFO) accounts for any purpose other than the existing mechanism.
The clarification came in a written reply in the Lok Sabha by Minister of State for Finance Pankaj Chaudhary amid questions over whether thousands of crores lying unclaimed with LIC and EPFO could be diverted for other uses.
The minister said that under the Insurance Regulatory and Development Authority of India (IRDAI) Master Circular issued on June 19, 2024, insurance amounts that remain unclaimed for more than 10 years are transferred to the Senior Citizen Welfare Fund (SCWF). He added that there is currently no proposal to alter this mechanism or utilise the money for any other purpose.
WHAT HAPPENS TO UNCLAIMED LIC MONEY?
According to the government, LIC was holding unclaimed amounts worth Rs 7,318.50 crore as of March 31, 2026.
Of this, Rs 5,564.55 crore belongs to policyholders and beneficiaries.
Rs 1,753.95 crore is income that has accrued on those unclaimed amounts.
If the amount remains unclaimed for more than 10 years, it is transferred to the Senior Citizen Welfare Fund under the existing rules. The latest clarification makes it clear that the government does not intend to use these funds for any other purpose.
WHAT ABOUT EPFO MONEY?
The government also made an important clarification regarding EPFO.
It said there are no "unclaimed" EPFO accounts.
Instead, there are "inoperative" EPF accounts. These are accounts that have not seen contributions for a long period but still belong to their respective members.
As of March 31, 2026, inoperative EPF accounts held Rs 9,330.56 crore.
The clarification is significant because these accounts are not treated as government-owned money and continue to belong to EPF subscribers until they or their nominees claim the amount.
HOW IS LIC TRYING TO TRACE POLICYHOLDERS?
The government said LIC has stepped up efforts to help policyholders and nominees claim their money.
Policyholders can search for unclaimed amounts through LIC's official website.
Apart from this, LIC has been reaching out to customers through letters, SMS, local agents, Bima Sakhis and even credit bureau agencies to locate policyholders and nominees.
The insurer has also participated in the Finance Ministry's "Your Money-Your Right" campaign and has been running awareness advertisements across the country in multiple Indian languages to encourage people to check whether they have any unclaimed money.
EPFO PLANS AUTOMATIC SETTLEMENT
The government also highlighted a new initiative aimed at making it easier for EPF subscribers to receive money lying in inoperative accounts.
EPFO has categorised inoperative accounts based on their Know Your Customer (KYC) status.
A pilot project has now been approved for the automatic settlement of Aadhaar-verified inoperative EPF accounts with balances of up to Rs 1,000.
Under this system, the money will be credited directly to Aadhaar-linked bank accounts without requiring subscribers to submit fresh claims or additional documents.
The government said this model could later be expanded to accounts with higher balances after completing due diligence.
Apart from the automatic settlement initiative, EPFO is also trying to reconnect with members through social media campaigns and its Nidhi Aapke Nikat (NAN) 2.0 outreach programme.
These initiatives are aimed at helping members identify dormant accounts, update their details and claim money that still belongs to them.
WHAT THIS MEANS FOR POLICYHOLDERS AND EPF MEMBERS
The government's clarification puts to rest speculation that unclaimed LIC or EPFO money could be diverted for other purposes.
Instead, the focus remains on helping policyholders, EPF subscribers and their nominees trace these funds and complete the claim process.
At the same time, the latest figures show that more than Rs 16,600 crore is lying either as unclaimed insurance money or inoperative EPF balances, underlining the need for people to regularly check old insurance policies and provident fund accounts to ensure their savings do not remain unattended.
