By Tina Edwin
The Employees’ Provident Fund Organisation (EPFO) has seen a dip in new enrolments and thereby, total contributions, in recent months. Tina Edwin looks at the reasons behind this and whether changes in tax norms and better response to the National Pension System have played a role in the drop
EPFO enrolment trends
The number of new EPF subscribers fell by 4.4% in 2023-24 to 10.9 million from 11.5 million in 2022-23, as new additions to the social security scheme normalised after the sharp rise in the aftermath of Covid19 pandemic. It rose 27% in 2021-22 and 6% in 2022-23 due to the backlog of registration due to the Covid-19 shutdowns and a recovery in employment creation in the post-pandemic period.
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EPFO enrolled 947,068 new members in September 2024, against 978,275 in August 2024 and 1.11 million in June, the highest in FY25 so far. Provisional payroll data for September 2024 shows net addition (number of new subscribers less number of subscribers that exited plus old subscribers returning) of 1.88 million, 9.33% up from September 2023. The total number of new members enrolled was 6.15 million during April-September 2024.
New subscribers, and thereby contributions to EPFO schemes, should continue to grow due to India’s demographic profile and gradual formalisation of the labour force. Policy interventions by the government are also likely to help increase both enrolment and contributions.
Changing trends in contributions & investment of corpus
The growth in the total corpus of various funds managed by EPFO has also slowed down a bit – it grew 15.9% to Rs 24.75 lakh crore in 2023-24, from Rs 21.36 lakh crore in the preceding year. In recent years, except 2019-20, the corpus grew more than 16% annually. The changes in tax laws may have affected contributions to the EPF scheme last year. A sizeable portion of the EPF corpus is invested in debt instruments, with about 9.5% in equities through exchange-traded funds (ETFs). The government is looking to hike the retirement fund body’s exposure to the segment significantly further so as to raise the returns for EPF subscribers from 8.25% in FY24 to as high as 10%. The corpus has risen faster in recent years, nearly doubling from about Rs 13.33 lakh crore it managed in March 2018.
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