The government on Thursday notified a hike in wage ceiling to R15,000 per month from Rs 6,500 for mandatory deduction of provident fund and a minimum pension of Rs 1,000 per month for subscribers of EPFO. Over 5 million workers will benefit.
The labour ministry amended the Employees Provident Funds Scheme so that all employees having a basic salary of R15,000 or less will have to be mandatorily brought under the ambit of EPFO and PF is deducted every month. The new rule comes into effect from September 2014. "Our estimate is that 50 lakh workers will be added in the EPFO subscribers base," central provident fund commissioner KK Jalan told FE. This will also help in increasing the EPFO corpus significantly by Rs 30,000-50,000 crore per annum.
EPFO now has a subscriber base of 4 crore active members contributing to PF every month. There are a total 14 crore PF accounts as many employees have multiple PF accounts as they have not been able to transfer or withdraw their money after switching jobs. With hike in the wage ceiling, the minimum pension that EPFO will pay from its Employees Pension Scheme will be R1,000 per month. Raising the minimum pension from R540 to R1,000 will cost EPFO an extra R1,250 crore in a year, Jalan said.
The notification also said the insurance benefit from the Employees Deposit-linked Insurance Scheme has been raised by 20%.