The Employees Provident Fund Organisation will pay 8.5% interest to its subscribers for 2019-20, as committed. However, this will be paid in two installments of 8.15% now the rest 0.35% in December with arrears as the earnings of the retirement fund body has taken a hit during the Covid-19 pandemic. A decision to this effect was taken at the central board of trustees meeting of EPFO on Wednesday.
The board has also given its go ahead to increase the upper limit of payout under its deposit linked insurance scheme to Rs 7 lakh as against Rs 6 lakh while a proposal by EPFO to run a separate pension scheme for its subscribers met with resistance from employees’ representatives. The proposal will again be considered in the next meeting of the EPFO in December.
“The labour minister has said EPFO will pay the committed rate of interest in two installements. While 8.15% will be paid now, remaining 0.35% will be paid in December with arrears,” Sukumkar Damle, national secretary of the AITUC told ET. Damle was part of the virtual CBT meeting held on Wednesday.
The board, however, deferred its proposal to allow high-paid employees to contribute more to the pension corpus and linking the payout to individual contribution. “It has been decided that the government will come up with various templates for the proposed pension scheme in the next meeting,” Vrijesh Upafhaya of the Bhartiya Mazdoor Sangh told ET.
Under the existing formula, pension contribution goes to a common pool and earning from it, decides pension outgo based on a formula instead of individual contribution. Currently, an employee pays 12% to the EPFO and a matching contribution is made by the employer every month as statutory deduction from salary. Of the employer’s 12% contribution, 8.33% goes to pension corpus on a salary threshold of Rs 15,000.