Provident Fund Rules Likely to Be Changed: 10 Facts
The government is likely to introduce a Bill to amend the Provident Funds and Miscellaneous Provisions Act in the Budget session of Parliament, with the objective of bringing more workers under the social security benefit, said Rajesh Bansal, additional central provident fund commissioner.
Here is your 10-point cheat-sheet:
1) At present, firms with 20 or more employees come under the purview of Employees’ Provident Fund Organisation (EPFO), which administers the contributory provident fund scheme. The Bill may propose to halve this threshold limit to 10.
2) The Budget session of Parliament begins from February 23.
3) The Provident Fund Amendment Bill may also propose to reduce or waive the mandatory provident fund contributions by employees in certain cases based on the financial position of the sector.
4) EPFO has a base of over 5 crore subscribers and receives over Rs 70,000 crore as incremental deposits every year. The retirement fund body manages a corpus of nearly Rs 6.5 lakh crore.
5) Last year, Finance Minister Arun Jaitley in the Budget had announced that an employee earning up to Rs 15,000 per month will have to mandatorily maintain an provident fund account. Earlier, if the employee earned above Rs 6,500 per month, it was voluntary to have a provident fund account. This is expected to bring nearly 50 lakh additional formal sector workers under the ambit of the social security schemes of the retirement fund body.
6) The government had also fixed the minimum pension for EPFO subscribers at Rs 1,000 as well as increased the maximum insurance limit for provident fund subscribers to Rs 3.6 lakh, from Rs 1.56 lakh. This hike will benefit over 30 lakh pensioners.
7) Every month, 12 per cent of an employee’s basic salary goes into the provident fund account and the employer matches the contribution. Out of the employer’s contribution, 8.33 per cent goes into the Employees’ Pension Scheme.
8) Housing Scheme: In a recent note, the Prime Minister’s Office had asked the retirement fund body to promote affordable housing for its subscribers and use its funds for the purpose. According to the note, deployment of 15 per cent of EPFO funds as loan for low-cost housing would generate a credit flow of Rs 70,000 crore and can create 3.5 lakh additional low-cost homes.
9) The Labour Ministry is keen on a scheme under which EPFO subscribers could withdraw their PF deposits to make part-payment of the total cost of the house, reports said. At present, EPFO subscribers can withdraw money from their PF accounts for buying houses only after contributing for a period of five years.
10) Inoperative Accounts: Nearly Rs 27,000 crore of money is lying ‘inoperative’ with the retirement fund body for lack of accurate details of workers. A special facility has been launched on EPFO’s website to enable members to identify and trace out their old accounts marked as inoperative. PF accounts that are inactive for 3 years stop earning interest.