Old wine, new bottle, Pg6

Key Highlights:

• The Union Labour and Employment Ministry has notified new rules for the Employees’ Provident Fund (EPF), Employees’ Pension Scheme (EPS), and Employees’ Deposit Linked Insurance (EDLI).
• These rules are a procedural formality following the enforcement of the Code on Social Security, 2020, since November last year.
• The Central Board of Trustees (CBT) of the Employees’ Provident Fund Organisation (EPFO) had approved these social security measures four months prior.
• Subscribers are disappointed as the minimum monthly pension of ₹1,000 and the monthly wage ceiling for contribution to the PF beyond ₹15,000 remain unchanged.
• Approximately 36.8 lakh out of EPFO's 81.5 lakh pensioners receive a monthly pension of ₹1,000 or less.

Detailed Insights:

• The Code on Social Security, 2020, subsumes nine existing labour laws, including the Employees’ State Insurance Act, 1948, and the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
• The current minimum monthly pension of ₹1,000 and the wage ceiling of ₹15,000 were last determined 12 years ago.
• The government's annual grant-in-aid for the minimum pension, benefiting about 20.6 lakh pensioners, is approximately ₹1,000 crore.
• The government's outlay of ₹11,000 crore towards the EPS for the current year primarily covers its contribution of 1.16% of monthly pay, limited by the ₹15,000 wage ceiling.
• The article suggests restoring the applicability of the EPS to all workers, irrespective of their pay.
• It also proposes that the government could formulate a tailored scheme with the Pension Fund Regulatory and Development Authority (PFRDA) if EPFO faces an overburden.

Key Concepts Involved:

• Employees’ Provident Fund (EPF): A mandatory savings scheme for employees in India, managed by the EPFO.
• Employees’ Pension Scheme (EPS): A social security scheme providing pension benefits to employees upon retirement, funded by a portion of EPF contributions.
• Employees’ Deposit Linked Insurance (EDLI): An insurance cover provided to EPFO members, offering benefits to nominees in case of the member's death.
• Code on Social Security, 2020: A comprehensive legislation consolidating and amending laws relating to social security in India.
• Employees’ Provident Fund Organisation (EPFO): A statutory body managing provident funds and pension schemes for organized sector employees in India.
• Pension Fund Regulatory and Development Authority (PFRDA): The regulatory body for pension funds in India, including the National Pension System (NPS).