EPFO to raise salary cap for pension coverage of more workers
People earning below Rs 25,000 a month as basic salary will be covered under pension plan. Current ceiling is Rs 15,000.india Updated: Apr 05, 2017 21:01 IST
The Employees’ Provident Fund Organisation (EPFO), India’s state pension fund, will raise the salary ceiling of its mandatory coverage to ensure more workers get retirement benefits.
The proposal says people earning a basic salary of below Rs 25,000 a month will be mandatorily covered under the pension plan.
Currently, workers earning less than Rs 15,000 a month are eligible for the provident fund.
“We are raising the ceiling to offset inflationary factors. Nearly one crore (10 million) additional workers will get the retirement benefit if the ceiling is raised,” an EPFO official said.
The proposal set to be cleared when the EPFO’s central board of trustees meet on April 12.
“We are wholeheartedly supporting it. It is good that more people get retirement benefits,” said DL Sachdev, national secretary of the AITUC, a Leftist labour union and an EPFO trustee.
Trade unions have demanded retirement schemes for workers in the unorganised sectors, who constitute more than 90% of India’s workforce.
The revised salary ceiling would mean an additional burden of Rs 2,700 crore for the Union government. The Centre contributes 1.16% of the basic wage of EPFO subscribers to their pension scheme.
Sources said there would be no extra burden on employers, who may continue to pay the old rate of contribution to the employee’s provident fund even if people getting Rs 27,000 become entitled to EPFO coverage.
At present, employers pay 12% of Rs 15,000, or Rs 1,800, a month for each worker’s pension fund.
The EPFO manages pension plans of more than 80 million members.