EPFO May Reduce Provident Fund Contributions to 10%
EPFO trustees may approve a proposal to reduce the mandatory contributions toward social security schemes to 10 %.
Trustees of retirement fund body EPFO may approve a proposal on Saturday to reduce the mandatory contributions toward social security schemes run by it to 10 percent for workers as well as employers.
Presently, employees and employers contribute 12 percent of basic wages each towards Employees Provident Fund Scheme (EPF), Employee Pension Scheme (EPS) and Employee Deposit Linked Insurance Scheme (EDLI).
The proposal to reduce the contributions by employers and employees to 10 percent of basic wages, including basic pay and dearness allowance, is listed on the agenda for meeting of the Employees' Provident Fund Organisation (EPFO), scheduled on 27 May 2017 in Pune, a source said.
The source said the labour ministry received several representations stating that the move will leave more money with workers for expenditure and reduce employers liability, which will eventually perk up economy.
However, trade unions have decided to oppose the proposal saying this will dilute these social security schemes.
An EPFO trustee and Bharatiya Mazdoor Sangh leader P J Banasure said:
We will oppose this proposal. This is not in workers interest.
Another trustee and All India Trade Union Congress Secretary D L Sachdev said:
The reduction of contributions will reduce the benefits for workers by four percentage point. At present, employer and employee contribute 24 percent of basic wages. This will be reduced to 20 percent.
At present the employees' entire 12 percent contribution is deposited into his EPF account. Besides, 3.67 percent is also contributed to the EPF account by the employer, who also contributes 8.33 percent of basic wages to the EPS account.
That apart, the employer also contributes 0.5 percent of basic wages towards the EDLI for insurance benefit. Thus, the employer eventually contributed 12.5 percent of basic wages.
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