The labour ministry is considering introducing comprehensive changes in the Employees’ Provident Fund Organisation (EPFO) rules, in order to give the subscribers more flexibility in making contributions to the EPF. It is also evaluating ways for the beneficiaries to avail higher pensions, official sources said.
As per the current rules, the entire contribution of the subscriber, that’s 12% of their “basic salary”, goes to the EPFO. The matching employer’s contribution, on the other hand, is bifurcated– 3.67% goes to the EPF, while 8.33% goes to the Employees’ Pension Scheme (EPS). Apart from this, the Government of India also contributes 1.16% for an employee’s pension.
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The EPS, administered by the EPFO, aims to provide employees with pension after the age of 58. “If we allow members to contribute more than 12%, they may contribute more, and eventually get higher pension post retirement,” the source said, adding that the ministry is weighing several options.
The total amount in the investment corpus of the EPFO stood at Rs 21.3 lakh crore in 2022-23, up from Rs 18.3 lakh crore in 2021-22.
Besides, the labour ministry is planning to bring in a provision to include gig and platform workers under the EPS’ ambit. “Employers of such workers may be asked to contribute 1-2% of the worker’s monthly earnings to the EPS,” the source said.
The labour ministry is awaiting a report from an internal-committee set up on this issue, which is likely to be submitted in December. “If the platform/gig worker is employed by 2-3 organisations, all of them would be asked to provide for the pension.”
Currently over 10 million such workers exist in the country, and this number is likely to rise to 50 million in the next four-five years. The companies which employ such workers include Zomato, Swiggy, Dunzo and Urban Company.
EPF accounts are mandatory for employees earning up to Rs 15,000 a month as basic pay. There is a proposal to raise this to Rs 25,000.
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An employee’s contribution to the EPF account is allowed as a deduction up to Rs 1.5 lakh under Section 80C of the IT Act.
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