1. Provident fund payout: Optional feature removed by Centre; here is what Narendra Modi government is planning for workers

Provident fund payout: Optional feature removed by Centre; here is what Narendra Modi government is planning for workers

With the social security cover being broadened, the government has abandoned a plan to make employees’ provident fund contribution optional for workers with relatively low wages.

By: | New Delhi | Published: August 16, 2017 5:11 AM
employees provident fun, employees provident fun news, provident fund payout, epf, epfo, narendra modi government According to the labour ministry’s latest plan elucidated in the Code on Social Security and Welfare, benefits like mandatory EPF, pension and insurance will be made available to all workers. (Reuters)

With the social security cover being broadened, the government has abandoned a plan to make employees’ provident fund (EPF) contribution optional for workers with relatively low wages. In Budget 2015-16, finance minister Arun Jaitley proposed optional EPF for “employees below a certain threshold of monthly income, without affecting or reducing the employer’s contribution”. The idea was that low-income workers are not deprived of cash to meet their immediate household requirements due to the EPF obligation.

Sources said that Jaitley’s proposal has been shelved as it ran contrary to the government’s plan to bring workers of almost all categories — including those in the unorganised sector, the self-employed, part-time and casual workers and those earning below the “minimum wage” — under a robust, well-defined and comprehensive social security net. An amendment to the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, was necessary to implement the optional EPF proposal.

According to the labour ministry’s latest plan elucidated in the Code on Social Security and Welfare, benefits like mandatory EPF, pension and insurance will be made available to all workers.

At present, there are around 5 crore active EPF subscribers in the country, which is just about 10% of India’s total labour force, including agriculture workers. A total of 9.26 lakh establishments have been registered with the EPFO as of March 2016.

The EPF & MP Act makes it mandatory for all establishments with 20 or more employees earning less than `15,000 monthly wage to join the EPF scheme. Others can also join in the scheme voluntarily. At present, there are 190 industries or classes of establishments, involved in trading, commercial and services sectors or in school, hospitals and restaurants, where the the Act is applicable.

In June last year, the Cabinet approved a special package for the textile and apparel sector, under which the entire 12% employer contribution for EPF is borne by the government for new workers. Another proposal under the package was to make EPF contribution for employees engaged in the sector earning less than `15,000 month optional, but this hasn’t been implemented so far.

The intention behind both these proposals was to leave more money in the hands of the workers so that their purchasing power go up. Also, employers will be incentivised to create more employment at the entry level.

Under the proposed Code on Social Security and Welfare, contributions from workers and employers will be supplemented by government outlays (as welfare funds) to create social security funds in each state. These funds would be used to provide assorted benefits to workers such as pension, provident fund, group insurance as well as sickness and maternity benefits, with the government pitching in where the workers themselves are unable to contribute.

While the employee contributes 12% of the basic pay to EPF, the employer contributes 8.33% towards employees’ pension scheme and 3.67% to the EPF itself. Additionally, employers also pay 0.5% towards Employees’ Deposit-linked Insurance scheme, 0.65% as EPF administrative charges and 0.01% as EDLI handling fee, taking the total contribution to 13.16%.

  1. A
    Abinash sahoo
    Aug 17, 2017 at 10:20 pm
    Modi ji is best leader
    Reply
    1. A
      Atheeq
      Aug 16, 2017 at 10:22 pm
      Nice information those who working as a labour
      Reply
      1. S
        Satish
        Aug 16, 2017 at 8:46 pm
        On the one hand BJP Govt is bringing so many social security scheme but on the other hand some bureaucrats of EPFO are not honouring the judgements of Hon'ble Supreme Court in number of cases relating to EPS95 scheme. There are two types of establishments under the PF Act namely unexempted units and exempted units. As per the Act, big establishments are granted exemption and they have their own Trust to maintain the EPF subscriptions. However, Pension subscription is transferred to respective RPFC office every month. On the basis of Judgements of Hon'ble Supreme Court, instructions were issued by RPFC New Delhi, to give an option that employee/retired employee is willing to give subscriptions on full pay instead of the ceiling limit of Rs.6500. But suddenly in May, 2017 another circular was issued by RPFC that this benefit will not be extended to Exempted Units. This is a clear cut discrimation and violation of Fundamental Rights. Hon'ble Modi Ji may look into this do justice.
        Reply
        1. S
          Shekar n
          Aug 16, 2017 at 7:51 pm
          Its used for earning below 15000 k per month
          Reply
          1. A
            avpanse
            Aug 16, 2017 at 7:08 pm
            Thanks to HONOURABLE MODIJI his Governance Mr. Arun Jaitleyji for taking care of all workers perticularly from unorganised sectors who are concerned about common workers Great Thanks to FINANCIAL EXPRESS FOR PUBLISHING THIS ARTICLE. I would like to inform you that through your Media please be informed that there is no attention paid for those. Workers whose contribution has already been deducted in the past i.e.from 15th.of November 1995 to 2005.are not paid any amount of pension even after submitting all relevant duly completed documents through proper channel through Company even after receiving due acknowledgment copy.The intention to bring to your notice is to make you aware that I am one of the suffer living without single Rd.pension. I am concerned about me as well as many of the workers from Organised/ Unorganised sectors who are the suffers Who is going to look after such workers ? I feel that there is a great Money Scam (Ghotala) in EPFO. Please highlight .
            Reply
            1. Ram Deshpande
              Aug 16, 2017 at 2:57 pm
              Some thing is more than nothing. Hon pM and FM are introducing this scheme is nice one. But think ₹ 1000 or ₹ 1500 per month pension is sufficient now adays?Govt is giving full pension to their retirees and max payment to their officers and staff. Where as private employee retired from services gets lumpsum amount which he keeps in banks for that Govt is reducing interest rate. Is it a justice?.All the money deposited by private employee is white and deposited after Its canning. This partiality.All middle class ,poor peoples and farmers are sufferers.Govt is keeping limit of ₹15 lacs max for scss.Is it will do even if 8 percent interest is given.All above class people are fed up now and thinking Corden off from BJP. PMO and Finance department shall give thought in time else see the consiqence in future Elections.Jai Hind.Ram Deshpande Narayanguda Hyderabad.
              Reply
              1. R
                Rameswar Pattanayak
                Aug 16, 2017 at 1:37 pm
                EPFO is a bloated organisation having too many employees whose ry, pension and other expenses are eating away the profit generated. The extensive use of IT have made most of the employee requirement redundant. They can be posted elsewhere to increase the thin margin of profit of EPFO. EPFO is shying away and hiding behind uncalled for and unrelated issues to scuttle payment of EPS95 pension on actual ry as per supreme courts order to exempted establishment employees.
                Reply
                1. A
                  Apte
                  Aug 16, 2017 at 8:33 am
                  1. It is good that the Union government has dropped the wrong measure of making PF contribution optional. 2. Some incidental observations on subject of PF: (a) Unorganised workers and farm labourers need social security the most and I believe a contributory pension scheme for them is a better way of proving social security at old age. Implementation of a pension scheme for these groups should be considered as a first preference, and with Aadhar card it may be possible to do that. (b). In case of many organised workers who contribute to PF, there is lack of awareness as to why savings are needed and why building a corpus through PF is important. Therefore, there are pre-mature withdrawals from PF which defeats the purpose. Hence care needs to be taken to educate PF members about importance of savings to meet old age needs. Of course it is not easy to impose a ban on PF withdrawals. Hence education is the only way to persuade PF members not to withdraw from PF.
                  Reply
                  1. Load More Comments

                  Go to Top