Source | The Economic Times
NEW DELHI: Retirement fund body EPFO is likely to raise this month the wage ceiling for mandatory coverage under its social security schemes to Rs 25,000 a month, from Rs 15,000 at present, bringing additional 1 crore formal sector workers in its net.
The proposal to increase the wage ceiling was listed for the Employees’ Provident Fund Organisation’s trustees’ meet held last Thursday.
“The proposal was deferred due to the paucity of time and would be taken up at another meeting being planned for later this month,” EPFO trustee D L Sachdev said.
Sachdev, who also All India Trade Union Secretary, said: “The back of the envelope calculations indicate that this move could bring in additional over one crore formal sector workers under the net of EPFO scheme in view of recent hike in minimum wages by states like Delhi breaching Rs 15,000 mark.”
According to the proposal tabled by the EPFO in its apex decision-making body the Central Board of Trustees’ meet last Thursday, the hike in the wage ceiling would mean an additional burden of about Rs 2,700 for the central government.
The central government currently contributes 1.16 per cent of total basic wages of the EPFO subscribers towards the Employees’ Pension Scheme 1995 which put an annual burden of around Rs 6,750 crore.
“The central government is contributing Rs 6,700 crore for around four crore contributing members of EPFO at the wage ceiling of Rs 15,000 per month. Thus, the additional burden estimate of Rs 2,700 crore on ceiling hike indicates clearly that this move should bring over one crore additional formal sectors under the EPFO coverage,” Sachdev said.
CBT has already decided to reduce the threshold for coverage under the EPFO scheme for employers to 10 workers from existing 20 workers but the amendment to this effect has not been made in EPF & MP Act, he added.
Once the Act is amended for reducing the threshold, around 60 lakh additional formal sector workers would be covered, he said.