The EPF (Employees’ Provident Fund) is the most popular investment for salaried individuals, and is maintained solely by the Employees’ Provident Fund Organisation of India (EPFO). A provident fund is created with a purpose of providing financial security and stability to elderly people. Generally one contributes in these funds when one starts as employee, the contributions are made on a regular basis (monthly in most cases). It’s purpose is to help employees save a fraction of their salary every month, to be used in an event that the employee is temporarily or no longer fit to work or at retirement.
The maximum amount that has been assured under the Employees Deposit Linked Insurance Scheme (EDLI) by the retirement fund body EPFO is Rs 3.6 lakh and is likely to get increased from the existing Rs 3.6 lakh to Rs 5.5 lakh.
In a recent meeting, the idea of increasing the insurance benefits for over six crore subscribers of the Employee Provident Fund Organization (EPFO) was put forward and it will soon be put for an approval. As per the aim of the meeting, the proposal of Pension and EDLI Implementation Committee will be proposed on September 9.
It is a decision that needs committees approval, and once it gets the nod, it will then be transferred for approval before the EPFO’s apex decision making body, the Central Board of Trustees (CBT) headed by the Labour Minister Bandaru Dattatreyar. After the trustees decision and approval, it will then be amended according to the orders of the ministries.
In the present scenario, in case of a demise of a person after one year continuous serving the organization, the nominee gets 20 times of average wage that was drawn by him/her from last 12 months and on top of that 20 percent bonus is also assured. The wage ceiling of 15,000 per month indicates an insurance cover of Rs 3.6 lakh
The present proposal describes that the maximum benefits should be raised to 30 times of the average pay that was drawn from the last 12 months and to add to that 50 percent of the average balance of the EPF account that is subjected to a ceiling of Rs 1 lakh.
After the approval, in total the assured sum will rise to 5.5 lakh from Rs 3.6 lakh.
The proposal also takes in action the two conditions for the employees who had served the organization for less than 12 months and those who had served it for 12 months.
The existing scheme benefits the employees with less than 12 months in the organization with an amount of Rs 1.2 lakh. The employees who fall in this category are entitled to a sum assured which is equivalent to their average balance in the PF account if it is less than Rs 50,000. In case the PF balance is more than Rs 50,000, they are entitled for the same amount and in addition 40 per cent of the amount above Rs 50,000 subject to a maximum ceiling of Rs 1 lakh. They are also entitled to 20 per cent bonus overdue amount.
The EPFO had paid 8.75 per cent rate of interest for 2013-14 and 2014-15 financial years to its subscribers.
The Labour Minister had earlier said that the PF body is further simplifying its forms to make sure that the huge no. of subscribers will receive hassle free services. It is proposed that attestation of employer will no longer be required in cases where the employees have got their KYC information including Aadhar seeded and have activated their UAN (Universal Account Number).