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Thursday, Sep 19, 2019

J&K reorganization to boost EPFO corpus by over Rs 15,000 crore

EPFO has given a go ahead to the proposal which will bring in more than 12,000 firms and establishments under the pension fund ambit. The application of central EPF Act will be effective 31 October 2019, said official

business Updated: Sep 12, 2019 14:36 IST
Prashant K. Nanda
Prashant K. Nanda
livemint, New Delhi
J&K was governed by its EPF scheme of 1961 and Employees Deposit Linked Insurance (EDLI) linked scheme of 2000 (Since the IL&FS defaults, it can be noted that NBFCs and housing finance companies (HFCs) were facing a crisis of confidence, sending call money rates higher and overall liquidity tight.)
J&K was governed by its EPF scheme of 1961 and Employees Deposit Linked Insurance (EDLI) linked scheme of 2000 (Since the IL&FS defaults, it can be noted that NBFCs and housing finance companies (HFCs) were facing a crisis of confidence, sending call money rates higher and overall liquidity tight.)(Mint photo)
         

The abolition of Article 370 and bifurcation of Jammu and Kashmir (J&K) into to two Union territories (UTs) is going to boost the retirement saving corpus of Employees Provident Fund Organization (EPFO) by over Rs 15,000 crore as the central body takes over the state PF corpus and bring their organized sector employees under its social security net.

The central board of the EPFO has given a go ahead to the proposal which will bring in more than 12,000 firms and establishments under the pension fund ambit. The process is expected to add around 300,000 plus subscribers under its purview, at least two government officials said requesting anonymity.

So far, J&K was governed by its EPF scheme of 1961 and Employees Deposit Linked Insurance (EDLI) linked scheme of 2000. Since the state was enjoying special status under Article 370 of the constitution, it had no influence from the central EPFO act. The central EPFO act also provides pension benefits to its subscribers other than the provident fund and EDLI benefits. As EPF systems of J&K and Ladakh get centralized, organized sector workers of both the UTs will also be eligible for pension facilities.

“It has been approved to do all necessary ground work to extend the EPF Act to both the union territories,” said Michael Dias, a central board member of the EPFO.

“The EPFO will corpus will jump as fresh deposits from few lakh new subscribers will get added to the retirement fund. Since, EPFO is a social security body more than the jump in corpus, the move will bring benefit to more people by providing PF, pension and insurance facilities to workers of both the UTs,” said one of the two government officials cited above.

The application of central EPF Act will be effective 31 October 2019, said the second official, adding that the central retirement fund body needs to do a sizable spadework including setting up regional offices and actuarial analysis of the existing funds to expand the coverage to both Jammu and Kashmir and Ladakh.

“With promulgation of the EPF Act 1952 in the UTs, from the appointed day, it is imperative for the EPFO to put in place mechanisms to facilitate compliance and service delivery such as registration by establishments, remittances of contributions , banking arrangements, enabling IT infrastructure, actuarial analysis of the existing fund and setting up of necessary infrastructure and offices,” said an EPFO document reviewed by Mint. “This will require, liaison with UT administration, advisory committees and the ministry of home affairs which is the nodal ministry for this purpose,” it added.

With the approval of the EPFO board, the central PF commissioner will take decisions to expand the PF coverage to the entire J&K and Ladakh from the coming week itself.

First Published: Sep 12, 2019 13:37 IST