The labour ministry is set to pitch for a hike in the statutory wage ceiling for provident fund (PF) contributions soon.
However, the call on the interest rate for PF contributions in 2013-14 is likely to be taken closer to the General Elections next year, giving the government some more mileage with the 8.15 crore members of the Employees’ Provident Fund Organisation (EPFO).
“With minimum wages in most states higher than the wage limit for the EPF, there is an urgent need for a review. We are very keen to increase to the wage cap to least Rs 10,000, if not Rs 15,000,” said a senior labour ministry official but added that the final call will have to be taken by the finance ministry.
The labour ministry is likely to call a meeting of the EPFO’s apex decision making body — the Central Board of Trustees (CBT) — later this month to take forward the proposal.
Currently, 24 per cent of a worker’s salary up to a ceiling of Rs 6,500 per month is mandatorily deposited with the EPFO. The wage ceiling, which was set in 2001, has pushed a large number of workers out of the PF net, depriving them of much-needed social security benefits. Until now, the finance ministry has resisted a hike in the wage ceiling for the EPF as its subsidy payout for the Employees’ Pension Scheme (EPS) will have to increase.
According to estimates, the subsidy on the EPS will have to rise to Rs 3,000 crore annually from the current Rs 1,100 crore, if the wage limit for PF is hiked to Rs 15,000 per month. Significantly, the wage ceiling for the related Employees’ State Insurance Corporation Scheme was hiked to Rs 25,000 per month last month from the earlier cap of Rs 15,000.
But the decision on the interest rate for PF contributions in 2013-14 could be taken early next year. “Calculations are yet to be finalised. Further with assembly elections scheduled later this year, we will have to wait till January to decide on the interest rate,” said the official, adding that the proposal is unlikely to be taken up by the CBT now.
The EPFO had announced an interest rate of 8.5 per cent for its subscribers in 2012-13, marginally higher than the 8.25 per cent paid in 2011-12.
Although the retirement fund manager is yet to finalise its estimates, sources said that the return in the current fiscal