The central board of trustees (CBT) of the Employees? Provident Fund Organisation will meet on Wednesday to endorse a comprehensive amendment to the EPF Act to increase the wage ceiling for mandatory PF coverage to Rs 15,000 per month from Rs 6,500, raise the retirement age for pension to 60 from 58 and guarantee a minimum pension of Rs 1,000 per month.
The move to raise the mandatory age ceiling will help EPFO rope in more subscribers (estimated to be an additional 50 lakh employees), increase its corpus and help reduce the deficit in its pension scheme. EPFO now has close to 8 crore subscribers.
Many companies now offer an option to fresh recruits starting with a basic salary of more than Rs 6,500 per month of choosing the national pension system (NPS) regulated by PFRDA instead of enrolling for EPF. Moreover, some companies even evaded PF coverage to employees especially contract workers by offering wages slightly over Rs 6,500 per month. Such options will be limited once the EPFO raises the wage ceiling to Rs 15,000, sources said.
Many of the proposals that are on the CBT?s agenda were long pending. After Oscar Fernandes took over as the labour minister, the pending issues were put on fast track. The UPA top brass also wanted to announce some of the labour welfare measures, including a minimum pension of Rs 1,000 per month ? a move that is expected to benefit around 35 lakh pensioners under the Employees Pension Scheme.
At present, employers contribute 8.33% of the basic wages towards EPS, and the government contributes just 1.16%. The proposal is to raise the government’s contribution to 1.79% and hike the minimum mandated basic salary to come under EPF to Rs 15,000 per month from the present Rs 6,500. Both the moves are expected to help cut the EPS deficit and enable it to offer a minimum pension of Rs 1,000 a month. Currently, the average pension paid by EPFO is Rs 900.
Sources said the extra contribution of 0.63% towards EPS will be restricted to employees whose basic salary will be Rs 15,000 or less.
