NEW DELHI, Mar 10: EPFO trustees are likely to discuss Budget proposals tomorrow, including making PF contribution optional for workers receiving salary below a threshold and allowing subscribers to choose between social schemes run by the retirement fund body and others.
Employees’ Provident Fund Organisation’s (EPFO) apex decision making body, Central Board of Trustees, headed by the Labour Minister, is also likely to appoint new fund managers for three year term, beginning April 1, and raise age limit for vesting of pension by two years to 60.
“Though the discussion of Budget proposal is not listed on the agenda of the CBT meeting tomorrow, but it is likely to come as any issue can be discussed with the permission of the Chair,” a source said.
As part of his Budget speech, Finance Minister Arun Jaitley had announced that options like exemption from PF contributions for certain workers and allowing all members to choose between EPFO schemes and other schemes will be provided.
“… For employees below a certain threshold of monthly income, contribution to EPF should be optional, without affecting or reducing the employer’s contribution,” Finance Minister Arun Jaitley had said in the Budget speech.
The Budget proposals, however, did not specify the salary threshold for this.
At present, all employees are required to pay 12 per cent of basic wages, including basic salary and DA, as contribution to the PF.
The employers make a matching contribution, with 8.33 per cent going towards pension, 0.5 per cent towards Employees Deposit Linked Insurance (EDLI) scheme and remaining towards provident fund.
Jaitley had also said employees will get to choose between EPF scheme run by retirement fund body EPFO and the New Pension Scheme (NPS) as also between health insurance products and Employees State Insurance Corporation’s (ESIC) health cover.
“With respect to the EPF, the employee needs to be provided two options. Firstly, the employee may opt for EPF or the New Pension Scheme (NPS),” Jaitley said.
He further said that employees should have an option of choosing either ESI (health cover) or a health insurance, recognised by the Insurance Regulatory Development Authority.
He said the Government intends to amend legislation in this regard after consultation with stakeholders.
Presently, over 5 crore workers are covered by mandatory social security schemes run by EPFO.
The NPS is applicable to all employees of central Government service (except Armed Forces) and central autonomous bodies joining service on or after January 1, 2004.
Any other Government employee who is not mandatorily covered under the NPS can also subscribe to NPS under “All Citizen Model” as it is open for all.
At present, about two crore workers (and their families) are provided mandatory health insurance by the ESIC.
Jaitley had said: “The situation with regard to dormant EPF accounts and the claim ratios of ESIs is too well known to be repeated here.
“It has been remarked that both EPF and ESI have hostages, rather than clients… The low paid worker suffers deductions greater than the better paid workers, in percentage terms.”
The Minister had also announced the creation of a Senior Citizen Welfare Fund using unclaimed deposits of about Rs 3,000 crore in the PPF (Public Provident Fund) and Rs 6,000 crore in the EPF corpus.
This corpus will be used to subsidise the premiums of vulnerable groups such as old age pensioners, BPL card holders, small and marginal farmers and others.
However, the trade unions have reservation about using EPFO’s money for other schemes. They have also opposed the proposals of making it optional for workers to pay PF contribution and choosing between social security schemes run by EFPO and others.
Trade unions had said approving these proposal may dilute the social security law in the country.
The CBT may also discuss the new investment pattern notified by the Finance Ministry, which allow non-Government pension funds to invest from 5 to 15 per cent of their corpus in equity and equity-linked investments.
They will also oppose this investment pattern as they have done in the past in view of volatile nature of stock markets.
According to the agenda listed for the meeting, asset management firms ICICI Securities Primary Dealership, Reliance Capital AMC and HSBC AMC have emerged as top bidders for managing the huge corpus of EPFO.
The other shortlisted bidders are UTI AMC, followed by ICICI Prudential and Birla Sun Life AMC.
Though SBI had also submitted its bid, the CBT has already nominated it as fund manager for another term and is expected to approve its appointment on March 11.
EPFO manages a corpus of Rs 6.5 lakh crore. The funds are being managed by SBI, HSBC AMC, Reliance Capital AMC and ICICI Securities PD.
The term of these fund managers ends on March 31, 2015. (PTI)
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