1. Provident fund, pension for whole working population? Here’s what govt plans to do

Provident fund, pension for whole working population? Here’s what govt plans to do

Given the current level and growth of workforce, this would mean that an additional 50 crore people would enjoy the above benefits

By: | New Delhi | Updated: June 9, 2016 8:08 AM
The Employees’ Provident Fund (EPF) is a retirement planning tool; a subscriber contributes 12% of his/her basic salary to EPF and the employer also makes a matching contribution. (Reuters)

The Employees’ Provident Fund (EPF) is a retirement planning tool; a subscriber contributes 12% of his/her basic salary to EPF and the employer also makes a matching contribution. (Reuters)

The Union labour ministry has proposed that provident fund, pension and insurance benefits, currently being accorded to a section of organised sector workers, be extended to the whole working population of the country by 2030.

Given the current level of workforce and the growth of labour force, this would mean that an additional 50 crore people would enjoy the above benefits given under state patronage over the next one-and-a-half decade.

Currently, a little over four crore people are helped by the schemes run by the Employees’ Provident Fund Organisation (EPFO) and around two crore enjoy the insurance cover provided by the Employee’s State Insurance Corporation (ESIC). As the EPFO and ESIC beneficiary lists overlap, the workers currently under the EPFO-ESIC umbrella could be around five crore.

According to a ministry official who confirmed a vision document was under preparation for extending the benefits to larger sections of the country’s growing workforce, the widening of the cover will begin with the organised sector. “We could gradually bring the unorganised sector workers also under the ambit of EPFO and ESIC. The plan is to implement the programme in phases,” the official said.

Of the country’s current workforce (47.41 crore as counted in 2011-12), over 90% are in the so-called unorganised sector, which includes tiny industrial units and trading outfits, besides household workers.

The Employees’ Provident Fund (EPF) is a retirement planning tool; a subscriber contributes 12% of his/her basic salary to EPF and the employer also makes a matching contribution. However, of the 12% employers’ contribution, 8.33% goes to the Employees’ Pension Scheme (EPS) and the remaining towards PF account. A member can withdraw the accumulations to cater to financial exigencies like a child’s marriage, education and buying home before retirement. A subscriber also gets pension benefits and insurance cover.

Organised sector employees, including those belonging to the private sector earning less than `15,000 per month, are now eligible for mandatory pension under EPS. The minimum pension payable under EPS is `1,000 a month.

Under ESIC, an employer has to pay 1.75% and the employer 4.75% of the wages towards ESIC contribution. The insured person gets both cash and medical benefits for self and family during his work life.

The official quoted above added that a proposal was under consideration to make ESIC cover available to the insured person even after his retirement. “In that case, a part of the subscription could come from the beneficiary and the remaining from the government,” he said, adding, however, that the proposal was yet to be concretised.

The labour ministry is busy discussing these proposals and after consultations with its subordinate offices, a vision document outlining three-year, seven-year and 15-year action plans would be finalised.

NITI Aayog had on June 27 asked the ministry to formulate its “vision and strategy” for the period beyond the 12th Five Year Plan. The final document has to be submitted to the think-tank by June 17.

The ministry also intends to enhance employment growth through various employment generation schemes for both men and women. Attempts would also be made to ensure the ease of doing business. “Employment generation is the first priority for the government. After going through a decade of almost jobless growth, we are working on a comprehensive strategy to bring employment to the core of our development,” labour and employment minister Bandaru Dattatreya said on Tuesday at the International Labour Conference (ILC) in Geneva.

  1. P
    PRADIP CHAKRABORTY
    Jan 19, 2017 at 10:48 am
    on going through the same, it is presumed the same is nothing but castle in the air. nobody takes care of a common people like us - if we could have been the central or state government pensioners then perhaps govt could have a thought and implemented same - am i wrong?
    Reply
    1. F
      ff
      Jun 10, 2016 at 1:09 pm
      first the service should be improved employees are facing problem for settlement staff should change there behavior
      Reply
      1. M
        mathpal tara
        Jun 9, 2016 at 6:30 am
        iF IMPLEMENTED, IT WILL BE A HISTORY OF MODI GOVERNMENT.....
        Reply

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