Tag Archives: EPFO

Only 8.5% interest for EPF in 2013-14?

17 Sunday Nov 2013

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I am giving a report from the PTI below:

Retirement fund body EPFO will pay at least 8.5 per cent rate of return on Provident Fund (PF) deposits for 2013-14 to its over 5 crore subscribers as provided in the previous fiscal and the decision in this regard could be taken as early as next month.

“The Employees’ Provident Fund Organisation (EPFO) will not pay less than 8.5 per cent interest rate on PF deposits for the current fiscal,” an EPFO official said.

“The decision in this regard could be taken in December as the body is planning to schedule a meeting of its apex decision making body Central Board of Trustees (CBT) next month,” he added.

EPFO had provided 8.5 per cent interest rate for 2012-13, up from 8.25 per cent in 2011-12.

Trade unions have written to the Labour Ministry to urgently convene the meeting of EPFO’s apex decision making body CBT to decide on the interest rate.

Ever since the CBT was reconstituted in May, no meeting has been held so far. Since the new CBT has not met after its reconstitution in May, no sub-committees could be reconstituted. The term of the sub-committees is co-terminus with the CBT.

The EPFO official said that CBT would have to meet at least twice before deciding interest rate on PF deposits for the current fiscal.

In the first meeting, the trustee would constitute FIC and in the second meeting they would decide on interest rate based on the recommendations of the committee looking at the proposal.

The proposal for the interest rate is prepared by the EPFO which is vetted by the FIC and goes to CBT for final consideration. Once approved by the CBT, the decision on interest rate requires concurrence of Finance Ministry which has to notify it.

Only after notification, the interest is credited into the accounts of subscribers.

As per the norms, EPFO is expected to announce rate of interest on PF deposits before the beginning of a financial year. However, for the past few years the same has been delayed.

EPF may get higher than 8.5% interest in 2013-14

10 Thursday Oct 2013

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The continuous pressure by the central trade unions and the better performance may result in a slight increase of interest for the more than 5 crore EPF subscribers in 2013-14. Last year, the interest paid was 8.5%.

The interest will be announced after the meeting of the Central Board of trustees (CBT) chaired by the Central Labour Minister takes the decision.

New Pension Scheme Worse than EPS

09 Wednesday Oct 2013

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New Pension System worse than EPS

Union Finance Secretary wrote to the Union Labour Secretary suggesting to encourage subscribers of Employees Pension Scheme (EPS) to shift to the New Pension Scheme (NPS) claiming NPS as a better substitute to EPS, NPS being ‘self-sustaining’ with ‘decent returns’ and ‘adequate pension wealth’ and “The government would be free from any open ended and financially unsustainable liability of EPS.

The Employees’ Provident Fund Organisation (EPFO) disagreed with the Finance Ministry’s proposal stating that return under EPS for May 2009 – May 2013 period would be 10.47% which is higher than the return under NPS; and EPS providing social security for lower income group in old age; pension to widows, children and dependents in case of death of the subscriber; many interim benefits; with provision of withdrawing self contribution in EPF. There is 15 years lock-in period in NPS. EPS subscribers get bonus of two years on completion of 20 years of service and there is provision of commutation or part withdrawal which are not available in NPS. EPS’ corpus stood at Rs 1.83 lakh crore wih 5 crore subscribers as against NPS corpus of Rs 29,852 crore with little over 47.70 lakh subscribers as on March 31, 2013. EPFO manages PF corpus of Rs 3.7 lakh crores plus Rs 1.83 lakh crore pension fund. (From: the Hindu, 6 August 2013/ Working Class)

Withdrawal from NPS may be allowed.

15 Thursday Aug 2013

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The Pension Fund Regulatory and Development Authority (PFRDA) is thinking in terms of allowing partial withdrawal to the subscriber from the National Pension Scheme (NPS), even before maturity. At present as per the PFRDA Ordinance, no withdrawal is allowed before maturity ie. before reaching the age of 60 years. The Parliamentary Standing Committee had earlier recommended that withdrawal should be allowed even before maturity. The NPS is reported to have about 53 lakh subscribers and a corpus of about Rs. 35,000 crore.

While the PFRDA under the Ministry of Finance is for shifting the subscribers of EPFO to the NPS, the Labour Ministry which operates the EPF is against the same. However, the Finance Ministry headed by P.Chidambaram is putting pressure, so that EPF corpus of lakhs of crores of rupees can be made available to the Fund Managers of NPS to be utilised for business purposes. The argument of the PFRDA is that while there is assured returns for EPF subscribers, the returns from the NPS is more. This is only a fallacy. The returns from NPS is volatile and it can be reduced also. It depends upon the market. The hard earned savings of the workers can not be put at the mercy of the corporates and the business sharks. Though the present Fund Managers are mainly PSUs like LIC and SBI, there is every chance that the private insurers, Mutual Funds etc. may gain access in future to the Fund. Then it will, no doubt be, a disaster. Hence the workers are completely against putting the Funds of EPF at NPS. This proposal is not acceptable to the workers. It has got to be resisted and defeated.

Immediate Settlement of EPF Claims

19 Wednesday Jun 2013

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New Delhi, Jun 19 : Retirement fund body EPFO is planning to settle all claims like transfer and withdrawal of provident fund within three days, a move that will benefit over one crore such claimants every year.
In order to give effect to the proposal of expeditious settlement of claims, Employees’ Provident Fund Organisation (EPFO) has called a meeting of all zonal heads on July 5, to draw an action plan.
The body is expecting 1.2 crore claims in the current fiscal and hopes that if around 70 per cent of those are settled in three days, then about 84 lakh claimants would be benefited.
Quick settlement of claims, EPFO said in an officer order, “was necessary to improve the image of the organisation.”
EPFO has already launched a Pendency Clearance Drive to settle all claims received before June 15 this year. As many as 5,38,704 claims were pending as on June 11 this year.
“…in 2012-13, the body has settled 1.08 crore claims, out of which 12.62 lakh claimants were dissatisfied as their claims were not settled within 30 days. Moreover 1.41 lakh claims not settled even after 90 days has brought down the image of the EPFO amongst our members,” the order stated.
It further said, “..cutomers expect change in the mindset from 30 days (maximum period for settlement of claims) to at least three days in computerised era for withdrawing their own money.”
The body is also in the process of introducing a facility where claimants would be able to apply online for transfer and withdrawal of their PF from July 1.
EPFO is setting up a central clearance house which will be operational on July 1. This will enable subscribers to apply online for settlement of withdrawal and transfer of funds claims. The new facility will also enable subscribes to track online the status of their applications for transfer and withdrawals.
Under the new system, the onus of verifying the details of the PF account from previous employers would be on the EPFO.
At present, employees have to get their applications verified from their employers for settlement of claims.
The body is managing a corpus of around Rs five lakh crore with a subscribers’ base of over five crores. (PTI)

EPF contribution to include all allowances also – employers oppose

28 Tuesday May 2013

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At present, contribution to the EPF is calculated on the basis of 12% of basic pay and dearness allowance, which will be deducted from the salary of the employee and remitted to EPFO. Same amount is to be contributed by the employers also. To reduce contribution to EPF, many employers, corporates etc. are not increasing the salary, but will increase the allowances etc. on which EPF contribution need not be remitted.  The contribution to ESI also is not increased. But at the same time, the employee will have to pay tax for the entire amount including the allowances.

The Employees Provident Fund Organisation (EPFO) had already proposed that all the allowances should be included for calculation of the EPF contribution. The EPFO is going to notify the provision so that the employees will get the benefit. But the employers and corporates are opposing the same and trying to influence the government so aas  to avoid contributing the increased amount.

The government should take a strong stand and ensure that the workers’ rights of getting higher contribution is implemented.