Several age-old schemes, including EPFO, ESIC, will cease to exist; here’s why

Once the proposed omnibus Labour Code on Security and Welfare (LCSW) comes into force, several age-old schemes – including the provident fund, pension and insurance schemes run under the EPF Act, 1952, and the sickness benefit scheme under the ESIC Act, 1948 – will cease to exist in their present forms.

EPFO (Reuters)

Once the proposed omnibus Labour Code on Security and Welfare (LCSW) comes into force, several age-old schemes – including the provident fund, pension and insurance schemes run under the EPF Act, 1952, and the sickness benefit scheme under the ESIC Act, 1948 – will cease to exist in their present forms. Also, organisations including EPFO (along with its board of trustees), ESIC and the director-general of welfare will be dismantled and merged into a new structure, comprising a National Social Security Council and Central and state Boards that would oversee and regulate all social security funds and schemes in the country.

According to official sources, all the assets and funds under the 16 extant social welfare schemes would be divided among the Social Security Funds (SSFs) to be set up in each state. While the EPF corpus consisting of 17 crore subscriber-accounts will be divided among SSFs proportionate to both the subscriber bases and fund sizes, EPFO funds under pension and insurance schemes, being “pooled funds”, will be devolved to the state boards solely on the basis of the number of subscribers in each state, they added. The SSFs – and their respective scheme funds – will vest with the respective state boards.

Of the 34,000-strong workforce of EPFO and ESIC — which is divided equally between the two, the Grade A officers will remain with the NSSC/Central Board while others will be deputed to the state boards, where they are currently posted, while being central government employees.

“The reorganisation won’t require any change in state laws,” a labour ministry official said. When asked if the proposed recast won’t require the states’ consent, he said state governments have been involved in the formulation of the new structure and have favoured the plan. “They (states) will have more discretion under the new structure,” he added.

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A host of other welfare programmes currently run by the Centre — and implemented with the help of states — will also be subsumed in the new structure, along with the respective administrative machinery. These include the schemes for maternity and unemployment benefits and schemes for the disabled. Sundry welfare funds — some of which funded by specific cesses — such as those for iron ore/manganese ore/chrome ore workers, building and construction workers, audio-visual workers, bidi workers, etc, — will also collapse into the proposed SSFs.

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