Ahead of a series of Assembly elections and the general election next year, the labour ministry has initiated a move to revamp key social security schemes for formal sector workers.
While the ministry has increased the wage ceiling for mandatory health insurance coverage to Rs 25,000 to bring in more workers under its ambit, it is also planning to improve benefits under its crucial life insurance scheme to bring back members who have migrated to similar schemes of private sector insurers.
The Employees’ Deposit Linked Insurance (EDLI) scheme provides insurance cover of up to Rs 1.3 lakh to every member of the Employees’ Provident Fund in case of death before retirement. But with the relatively low life cover under the scheme, employers were allowed to shift to group insurance plans of private companies if the benefits were better compared to the EDLI.
The Employees’ Provident Fund Organisation, which also manages the EDLI, has now begun a review of the scheme to life insurance scheme to match the benefits provided by private insurers. The issue was taken up at a review meeting of the EPFO earlier this month and a detailed proposal is now being worked out.
“The objective is to improve insurance cover to the worker through the already existing EDLI rather than seek help from private schemes. But the financial implication has to be studied. Any extra costs will have to be taken from the employer as the government does not provide towards the EDLI,” said an official.
Employers contribute 0.5 per cent of basic pay (with a ceiling of Rs 6,500 per month) of an employee as insurance premium to the EDLI scheme every month. While earlier, the insurance cover was linked to the PF balance, under the new rules the life cover is the higher of two options: 20 times the average wages of the last one year, with a cap of Rs 1,30,000; or the full amount in the PF account up to Rs 50,000 or 40 per cent of the balance amount.
Consequently, over the past few years, nearly 2,000 companies have chosen to move to group insurance schemes of