Skip to main content

Govt keen to have more under EPFO cover

THE government is considering an ordinance to get more organisations to join the Employees’ Provident Fund Organisation (EPFO), bringing additional 45 lakh workers within the coverage of a formal retirement benefit scheme.

At present, all non-government establishments having more than 20 employees have to park the retirement savings of their employees with the Employees’ Provident Fund (EPF), the flagship retirement benefit scheme of the EPFO. A small portion of the employee’s saving also goes to another scheme run by the EPFO, the Employees’ Pension Scheme (EPS).

The government wants to bring down the threshold limit to establishments having more than 10 employees. This will add another 45 lakh subscribers to EPF’s current about four crore members.

Since the government does not have the time to move a formal Bill to effect the change in the current session of Parliament, it is considering an ordinance. The government is keen to bring an amendment and ensure social security cover for more workers at the earliest. However, it is unlikely that the proposal, which is with the Cabinet, will be ready for formal presentation before Parliament in the on-going session. The government is keen to amend the EPF Act before the elections next year, and is mulling over the ordinance option. The government can make changes to law through ordinance when Parliament is not in session but it would have to be approved subsequently by Parliament.

The Central Board of Trustees (CBT), the core committee of the EPFO, had approved in August the suggestion to lower the threshold limit. While benefits of expanding the scope of the scheme are acknowledged, doubts have been raised whether the EPFO is ready for the same. The finance ministry is concerned how the EPFO, that is already facing deficit, will manage social security of another 45 lakh employees.

Although no annual evaluation of the pension fund has been put on record by the EPFO since 2004, the EPS is believed to be running a deficit of about Rs 45,000 crore. Deficit is a measure of excess of liabilities over assets. Lowering the threshold limit of coverage, it is feared, can cause the deficit in the pension fund to increase sharply. The official added that the finance ministry was also reluctant as wider coverage would mean increase in the dole given out by the government through its contribution to the pension scheme.

Popular posts from this blog

Term insurance

Term insurance may not be the most-marketed product by life cos, but it’s a must-have in today’s risk-prone lifestyle WHEN was the last time your insurance agent sold a term plan to you? It’s not a very popular policy among agents, as their commission in absolute terms is low because of the low-premium. Just as agents have their self interests in mind while selling, you need to make your own decision about your insurance needs, which are unique to your family. COST ADVANTAGE A term plan is pure protection. It is the cheapest type of life insurance policy. But what you see might not be what you get, most insurers have a range of health parameters for standard rates. If any of your health parameters — weight, blood pressure for instance fall outside this range, you will pay more. For some companies, the standard range is very narrow. EARLY BIRD GAINS A 30-year-old will pay 15% more premium than a 25-year-old. At 40, the premium is double of what is applicable for a 25-year old, points...

ICICI Prudential Balanced Fund

 ICICI Prudential Balanced Fund scheme seeks to generate long-term capital appreciation and current income by investing in a portfolio that is investing in equities and related securities as well as fixed income and money market securities. The approximate allocation to equity would be in the range of 60-80 per cent with a minimum of 51 per cent, and the approximate debt allocation is 40-49 per cent, with a minimum of 20 per cent. An impressive show in the last couple of years has propelled this fund from a three-star to a four-star rating. The fund has traditionally featured a high equity allocation, hovering at well over 70 per cent, which is higher than the allocations of the peers. But in the last one year, the allocation has been moderated from 78-79 per cent levels to 66-67 per cent of the portfolio. ICICI Prudential Balanced Fund appears to practise some degree of tactical allocation based on market valuations. Within equities, well over two-thirds of the allocation is parked i...

Reliance Life Insurance company introduces 17 ULIPs

Reliance Life Insurance company has announced the launch 17 unit linked insurance plans (Ulip). The new range of Ulips encompasses several categories including child plans, pension, protection, savings and investment, which are available in two versions — basic plan with tenure of over 15 years and another with a 10-year-term. According to an official release, these Ulips are primarily targeted at customers paying a premium of over Rs 10,000. All these schemes come with features such as capital guarantee, loyalty additions, higher internal rate of return and several fund options. The plans also offer riders, including payment of lump sum on diagnosis of specified critical illnesses, surgeries and additional life cover. Policyholders have the option of choosing between automatic asset allocation, systematic transfer plan and return shield options. Recently, the company launched two traditional insurance plans — Reliance Jan Samriddhi plan (RJSP) and Reliance Traditional Super InvestAssu...

TDS Rate and Personal Account Number(PAN)

    The TDS rate doubles to 20% from 10% if you fail to mention your Personal Account Number   IF you run a glance through your pay slip, you will come across something called TDS, which is tax deduction at source. In most cases, the employer deducts this amount at the time of payment of salary itself and pays the total tax amount to the government on behalf of all the employees. If you are a self- employed or practicing professional s, you have to pay this amount yourself.    Tax deducted at source is one of the modes of income tax collection by the government. Under the income-tax laws, income tax at specified rates is required to be deducted while making certain payments.    The rate of deduction of tax at source on interest and rent payment is 10%. For salary payments, the employers deduct income tax at source on a monthly basis after computing income tax liability on estimated annual taxable income of the employee. Tax benefits on housing loan, investments, etc are consid...

L&T Tax Advantage

Best SIP Funds to Invest Online   The fund follows a growth approach to investing in quality stocks that have a large-cap tilt This large-cap tilted ELSS has fared consistently and fared better than its benchmark by posting a higher margin of outperformance. The fund follows a growth approach to investing in quality stocks that have a large-cap tilt, which is evident in its portfolio. The portfolio is further well diversified across market capitalisation and sectors with over 60 stocks finding a place in it. The upside with this fund is the fact that it has witnessed both down and up cycles of the market to come across as a winner in the long run. Do not doubt the fund based on its size and a few mediocre years of performance, because when analysing its rolling three year returns, the fund's performance stands out to qualify as a must have ELSS in one's portfolio. Stay invested through the lock-in and there are chances of benefiting from returns as well as tax savings will prov...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now