Dear Parag,
It is possible only in Exempted PF establishment, where you can hold investment amount (Both the PF contributions of current month) and settle the PF account of retired person from the uninvested amount. Of course you are required to give reason for uninvested amount in the monthly return in Form 1 para 27 for settlement of claims, Home loan, advances etc.
I was working in German company Bombay Metal & Alloys (GG Brand) established in 1943 and having Exempted PF A/c. no. MH/10. I had settled many retired employees PF claims, gratuity etc. on last working days thru the uninvested PF contributions, which was necessary to invest in Govt. Securities.
In one situation one of our workmen had joined Godrej & Boyce (PF Exemp.), we received his PF transfer application in Form 13 in the morning and I had transferred his PF accumulations in the afternoon by issuing cheque favouring Trustees, Godrej & Boyce, Provident Fund. This was possible only because of Exempted Provident Fund (Trust).
However, it is practically not possible to settle PF claim on the last date of working of retired person because PF office will not settle the claim unless they receive the contribution till last working day from the employer.
Regards,
Suresh