The Employees’ Provident Fund Organisation has asked the labour ministry to raise the wage ceiling for mandatory EPF cover to R25,000 a month from R15,000 now for organised-sector workers.
The Employees’ Provident Fund Organisation has asked the labour ministry to raise the wage ceiling for mandatory EPF cover to R25,000 a month from R15,000 now for organised-sector workers. The proposal, if implemented, would raise the number of active EPF subscribers by around 50 lakh to 4.5 crore.
A subscriber contributes 12% of her basic salary to the EPF and the employer makes a matching contribution. However, of the 12% employers’ contribution, 8.33% goes to the Employees’ Pension Scheme (EPS) and the remaining towards the PF account. The Centre also pays 1.16% to the EPS for an employee. Although the threshold exists for mandatory cover, employers and workers can opt for the scheme even if the salary levels are higher.
The EPFO’s wage threshold was last raised in November 2014 from Rs 6,500 a month. The wage threshold for medical/cash and insurance benefits under the Employees’ State Insurance Corporation (ESIC) was raised earlier this year to Rs 21,000 per month from Rs 15,000 previously.
“We have written to the labour ministry for raising the EPF wage limit to R25,000,” central provident fund commissioner VP Joy told FE. He said hiking the threshold had become an imperative given the recent hike in the minimum wages by the Centre for workers in 45 scheduled employment categories.
Sources said the proposal to raise the EPF limit could face some resistance from employers’ representatives as many believe that this would be a great pain, particularly for small-scale industries.
As reported by FE earlier, the EPFO is also planning to make inroads into the unorganised sector — a segment where it has no presence and where retirement benefits are given only under the National Pension System (NPS). The 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 entire working population by 2030. Given the current level of the workforce and labour force growth, 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 decades.