Workers may soon get to choose between social security plans

In the race between the Employees’ Provident Fund and the National Pension System, workers may soon have the choice to opt between the two schemes while the labour ministry is planning to set up a voluntary Unorganised Sector Social Security Scheme that would provide retirement benefits to private citizens.

The ministry has proposed fresh amendments to the EPF and Miscellaneous Provisions Act, 1952, with the insertion of a new Section 16 (AB) that would facilitate the switch from the EPF to the NPS through a simple application at the PF office.

On exercising the option, the accumulated fund in the worker’s PF account would be transferred. The provisions of the EPF Act would no longer apply to the worker, who will then be mandated to contribute to the NPS. Workers will also have the option to switch back to the EPF from the NPS.

Fresh amendments to the Act also include the power to exempt establishments from the scheme as well as the setting up of a voluntary Unorganised Sector Social Security Scheme. The proposals will be taken up by the EPFO’s apex decision making body — the Central Board of Trustees on Tuesday, which will be followed by a tripartite consultation on the amendments by labour and employment minister Bandaru Dattatreya with employer representatives and trade union leaders.

“We want to try and finalise the amendments so that they can be tabled in Parliament when it re-convenes later this month,” said a senior official. The fresh amendments have also given the EPFO to exempt establishments from the provisions of the EPF Act. “To such establishments or class of establishments as notified by the Central government,” said the proposed amendment on sectors where the Act would not be applicable.

The labour ministry has also proposed a new voluntary scheme for unorganised sector workers and citizens of India that would provide them benefits of PF, pension and insurance that would be set up under the EPF Act.

While the ministry had already finalised amendments to the EPF Act in February this year, it had to redraft some of them following the Union Budget 2015-16, which had announced that workers would be given a choice to choose between the EPF and the NPS while for employees below a certain threshold of monthly income, contribution to EPF would be optional.