Context: Employees’ Provident Fund Organisation (EPFO) retained an interest rate of 8.25% on employees' provident fund (EPF) deposits for 2024-25, in the recent meeting by the Central Board of Trustees.
Relevance of the Topic:Prelims: Employees’ Provident Fund Organisation, Central Board of Trustees.
About Employees’ Provident Fund Organisation (EPFO)
- EPFO is a statutory body set up under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
- The Act and Schemes framed are administered by a tri-partite Board known as the Central Board of Trustees, Employees' Provident Fund.
- It consists of representatives of Government (Both Central and State), Employers, and Employees.
- The Board administers a contributory provident fund, a pension scheme and an insurance scheme for the workforce engaged in the organised sector in India.
- Provident fund: Financial scheme that aims to provide retirement benefits to employees.
- It is a savings scheme established by employers and/or employees to accumulate a fund over a period of time, which can be withdrawn by the employee upon retirement or under certain specified conditions.
- EPFO is under the administrative control of the Ministry of Labour and Employment.
Schemes by EPFO
The Board operates three schemes, namely:
- Employees' Provident Funds Scheme 1952 (EPF):
- Accumulation plus interest upon retirement and death.
- Partial withdrawals allowed for education, marriage, illness and house construction.
- Housing scheme for EPFO members to achieve the Prime Minister’s vision of Housing for all by 2022.
- Employees' Pension Scheme 1995 (EPS):
- Monthly benefit for superannuation/benefit, disability, survivor, widow(er) and children.
- Minimum pension of disablement.
- Past service benefit to participants of the erstwhile Family Pension Scheme, 1971.
- Employees' Deposit Linked Insurance Scheme 1976 (EDLI):
- The benefit is provided in case of the death of an employee who was a member of the scheme at the time of death.
- The benefit amount is 20 times the wages, a maximum benefit of 6 Lakh.
Key Agendas of CBT Meeting
- Supreme Court order on Higher PF Pension:
- Background: Supreme Court’s November 2022 ruling allowed employees to opt for a higher pension based on actual wages instead of the capped wage.
- Pro-Rata based calculation: EPFO argues that pro-rata pension calculation ensures equity between wage-ceiling pensioners and higher-wage pensioners.
- Concerns raised by workers’ representatives: Oppose pro-rata pension computation, stating it violates the Supreme Court order.
- Demand stricter directions for exempted establishments (private PF trusts) to comply.
- Current status: 70% of higher pension applications processed.
- Proposed changes to Employees’ Deposit Linked Insurance Scheme (EDLI):
- Current issue: No benefits if a worker dies within one month of joining the scheme.
- Proposed reforms:
- Minimum compensation of ₹50,000 for the family if the worker dies within a month.
- Increased compensation for deaths within six months.
- Relaxation of the one-year threshold for eligibility.