EPFO mulling new pension scheme for formal workers getting over Rs 15,000 basic wage

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Photo source: PIXABAY

EPFO is considering a new pension scheme for formal workers to get a basic wage of over Rs 15,000.

Retirement fund company EPFO ​​is considering a new pension product for organized sector workers who receive a basic wage of over Rs 15,000 per month and are not compulsorily covered by its employees’ pension scheme 1995 (EPS-95). Currently, all employees in the organized sector whose basic wages (basic pay and expensive allowances) are compulsorily covered under EPS-95 up to Rs 15,000 per month at the time of joining the service.

“Employees’ provident fund (EPFO) members are demanding higher pensions for higher contributions. Thus, it is actively considering introducing a new pension product or scheme for those with higher monthly basic wages of over ৷ 15,000,” a development source told PTI. .

According to sources, the proposal for the new pension product may come up for discussion at a meeting of the Central Board of Trustees (CBT), the highest decision-making body of the EPFO, on March 11 and 12 in Guwahati. During the meeting, a sub-committee constituted by the CBT on pension-related matters will also submit its report in November 2021.

The source explained that EPFO ​​customers are getting a monthly basic wage of more than Rs 15,000 who are forced to contribute less (at EPS-95 at 8.33 per cent of Rs 15,000 per month) and thus they get less pension.

EPFO revised the scheme in 2014 to increase the monthly pensionable basic wage to Rs 15,000. The threshold of Rs 15,000 is applicable at the time of joining the service only. It was revised above Rs 6,500 from September 1, 2014 in view of price hike and salary revision in the formal sector.

Later, it was demanded and discussed to increase the threshold monthly basic wage to Rs 25,000, but the proposal was not approved. According to industry estimates, the increase in pensionable wages could bring another 50 million formal sector workers under EPS-95.

“Under the Employees ‘Provident Fund and Miscellaneous Provisions Act, 1952, the maximum wage for coverage has been proposed from Rs 15,000 to Rs 25,000 per month by the Employees’ Provident Fund (EPFO). No decision has been taken on this,” said the former Labor Minister. Bandaru Dattatreya said in a written reply to the Lok Sabha in December 2016.

The source said that those who are either forced to contribute less or those who could not subscribe to the scheme need a new pension product as their monthly basic wage was more than Rs 15,000 at the time of joining the job.

The source added that there was no immediate move by EPFO ​​to increase the pension cap and in that case, the company would have to consider providing coverage to those in the formal sector who have been excluded from EPS-95 for higher reasons. Basic wages.

The issue of pensionable salary cap is also pending in the Supreme Court. In 2014, the Kerala High Court allowed employees to contribute to EPS-95 on the basis of actual basic wages drawn by them.

In April 2019, the Supreme Court dismissed a special leave petition filed by EPFO ​​against the Kerala High Court judgment. In January 2021, the Supreme Court recalled the dismissal order in the review petition filed by the EPFO.

In February 2021, the Supreme Court restrained the High Courts of Kerala, Delhi and Rajasthan from initiating contempt proceedings against the Center and EPFO ​​for non-implementation of their judgments.

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