G. Srinivasan
A very few social security measures for organized workers in private establishments in the country could truly boast of a successful instrument for retirees to enliven their otherwise staid evening to come to their aid than the pot of pension fund they contributed to in the career earlier. One such significant outfit set up with the passage of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF & MP Act) is the Employees’ Provident Fund Organization (EPFO) which has been administering the Act in letter and spirit down the decades. Currently, it implements three schemes framed under the Act viz., Employees’ Provident Fund Scheme (EPF), Employees’ Pension Scheme (EPS) and Employees’ Deposit Linked Insurance Scheme (EDLI). The overarching objectives of the Act is to provide social security benefits to the working class in the form of provident fund, pension and insurance benefits with the EPFO remit being to enforce provisions of EPF & MP Act, 1952, recover and manage money held in Trust and provide satisfactory service to the members of the scheme.
As of today, EPF & MP Act applies to 187 industries/classes of establishments with the number of covered establishments close to eight lakhs. EPFO membership as on end-March 2014 is 1.23 crore and the organization had settled claims worth Rs 1.23 crore in 2013-14. The size and scale of the services being rendered by EPFO could be gauged from the fact that it settles more than a million claims every month and 45 lakh pensioners are being serviced every month and more than Rs 2100 crore disbursed every month under EPF schemes. Importantly, as much as Rs 750 crore is disbursed under Employees’ Pension Scheme, 1995 every month and more than Rs 10 crore paid out each month as assurance benefits. As such, the efficient working of EPFO has wider ramifications across the community of subscribers to the pension fund as any misdeed or misuse on its part in managing the nest eggs of savings of legions of employees would give the latter tense times.
A report of the Comptroller and Auditor General of India (CAG) by way of performance audit of EPFO under the Ministry of Labour & Employment, laid in Parliament early this year, passed strictures on its performance and suggested remedial steps. The strictures include the continuation of wage limit for coverage of employees under EPF scheme at Rs 6500 since June 2001, consistent shortfalls in receipt of contribution from the Central Government, income of EPFO gleaned by way of administrative fees being more than its expenditure on running the scheme and the failure of the EPFO in not following prescribed pattern of investments. The CAG also castigated the EPFO that it was not “very encouraging towards voluntary coverage of its schemes”, while inspections of establishments were less than prescribed targets, leading to insufficient control over establishments. In this context, it urged the EPFO to closely monitor targets and ensure compliance for conducting regular surveys and inspections of establishments. It also called upon the EPFO to welcome establishments opting for voluntary coverage. While urging the EPFO to revise its administrative charges suitably, the CAG also suggested the organization to prudently match its earnings with interest payouts to it subscribers.
On EPFO defense, the Minister of State for Steel, Mines, Labour & Employment Mr. Vishnu Deo Sai said in a written response in Lok Sabha to a query on July 14 that the Government is notifying increased/revised minimum pension of Rs1000 per month to all subscriber members of EPS, 1995; He also stated that the EPFO has recommended additional benefits for employees that include increasing wage ceiling for coverage under EPF &MP Act from Rs 6500 per month to Rs 15,000 per month, enhancement of benefits under Employees’ Deposit Linked Insurance scheme by 20 per cent, though he did not indicate the timeline by which these would be put into effect. EPFO maintains that the process of settlement has been simplified and the authorities for approval of settlement have been reduced from three to two levels. He clarified that funds of EPFO are currently invested as per the pattern of investment notified by the Government in November 2013, according to which only investments in corporate debt and government bonds are allowed with no provision for investments in equities.
A point to note is the odious comparison being made out on the investment patterns of the EPFO and the New Pension Scheme (NPS), currently in place for government employees and also to corporate sector white collar workers. While funds for both the schemes are invested in the market with EPFO deliberately staying away from equities, the fact of the matter is that in case of NPS, the fresh investments are used to buy units as per the extant net asset value (NAV). In the case of EPFO, the whole sum is invested and the portfolio is held to maturity (HTM) with the interest actually received being credited to the members account. Hence, the returns on EPF are actual bearing no impact on the buffetings and fluctuations in market, while in the NPS, the mark-to-market portfolio valuations make net asset value gyrations both ways, analysts say, highlighting the twist in the tail!
Central PF Commissioner Mr. K.K. Jalan is on record that EPFO has specified timelines to undertake key tasks, the successful completion of which would bring about” a transformational shift in its way of functioning to the benefits of its legions of subscribers.” One such key initiative in this era of job-hop, shortened employment and increasing contractualisation and casualization of labour is a proposal to allot Universal Account Number (UAN) that would ensure complete portability. This would vastly relieve the hardship in making over employees’ PF accumulations when they switch jobs and they are subsequently allotted new account number. As a preliminary step, it is proposed to issue the numbers to the extant active members by mid-October 2014. The allotment of UAN would link all employments of the EPF members thus enabling portability.
Mr. Jalan said the introduction of Electronic Challan cum Return (ECR), designed for the employers to file their return digitally has greatly simplified the process of remittance of PF contributions by establishments. Simultaneously, EPFO is enabling employers not having a bank account with SBI to make payment PF contribution online with the recent introduction of the National Electronic Fund Transfer (NEFT) where 99 per cent of all payments, including pension payments, are done digitally. Mr. Jalan also contended that a transparent inspection policy with system- driven triggers and equipped with requisite norms has been adopted by the EPFO with the aim of simplifying and ushering in transparency and accountability. Alongside, a comprehensive pension process re-engineering has been put in place to ensure that the service level and comfort level for pensioners are complete. This would result in swifter credit of the pension account every month to the member account, besides facilitating the department to track the pension disbursement.
With available avenues for savings not fetching due returns to many a family, the contribution to pension fund by employees in return for an assured pot of pension money with monthly pension benefits in tow, post-retirement as guaranteed by EPFO is a surefire prudent instrument available now. (IPA)
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