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

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...

Equity investors should track market developments

The stock markets have been volatile over the last few days. They are in a sideways movement and trying to find the bottom after a fall of 20 percent a week ago. The market sentiments are not very positive at the moment and the recent developments are expected to dampen them further. Globally, governments and central banks are trying to cut rates and announce packages to improve business sentiments. These are some of the major developments in the markets last few month: A) Global On the global front, another large US bank went into a financial crisis. The US government took quick measures to avoid the spread negative sentiments in the markets. The US government announced a bail-out package and agreed to shoulder the losses on the bank's risky assets. China announced a large cut in interest rates and reserve ratio to boost the investor sentiments in the markets. Recently, the World Bank announced China's growth rate next year will come down to 7.5 percent. The European ...

Banks tweak ATM strategies

Unrestricted usage of third-party ATMs ends on Thursday The era of free ATM usage will come to an end on Thursday, October 15. Every transaction carried out on another bank’s ATM could cost an account holder as much as Rs 20 and withdrawals will face a limit of Rs 10,000, the Indian Bank’s Association has said in its guidelines. According to the guidelines, banks can offer savings-account holders five free thirdparty withdrawals every month —they can be charged from the sixth transaction onwards. Current account holders can be charged the fees, which ranges from Rs 18 to Rs 20, from the very first transaction. Most banks are convinced that charging current account and no-frill account customers from the word go is a good idea. It suggests that the usage of ATMs by current-account holders is price-insensitive. For others, banks have decided to frame their charges depending on the profile of the customer. For instance, HDFC Bank is allowing its salary account and premium customers an unl...

Fortis Mutual Fund

Fortis Mutual Fund, a relatively new player, it is still to prove its case and define its position in the industry. In September 2004, it came onto the scene with a bang - three debt schemes, one MIP and one diversified equity scheme. And investors flocked to it. Going by the standards at that time, it had a great start in terms of garnering money. Mopping up over Rs 2,000 crore in five schemes was not bad at all. The fund house has not been too successful in the equity arena, in terms of assets. Though it has seven equity schemes, it is debt and cash funds that corner the major portion of the assets. Most of the schemes are pretty new, and the two that have been around for a while have a 3-star rating each. The last two were Fortis Sustainable Development (April 2007), which received a rather poor response, and Fortis China India (October 2007). Fortis Flexi Debt has been one of the better performing funds, after a dismal performance in 2005. It currently has a 5-star rating. None ...

Women need to plan for Retirement

Plan for Retirement Online       Higher life expectancy, lower pay and fewer work years necessitate thorough planning.   Women have raced ahead of men in various fields but, when it comes to retirement planning, they tend to lag behind. Despite saving a higher proportion of their salary, compared to men, women generally do not take retirement planning seriously. Below are some of the reasons why they should: According to the United Nations Department of Economic and Social Affairs, in India, the life expectancy of women is 69 years and, of men, it's 66 years. Due to this, a woman will need an additional `55 lakh to manage her living expenses (see table).Besides, usually, women work fewer years compared to men to take care of children and family.Further, a recent study by Korn Ferry Hay Group shows that women in India earn 18.8% less than men. Not to mention, a higher life expectancy can also mean higher medical expenses as the likelihood of health ailments such as diabetes, high...
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