Employees Provident Fund Organisation 
(Ministry of Labour & Employment, Govt of India)
Head Office
Bhavishya Nidhi Bhavan, 14-Bhikaji Cama Place, New Delhi – 110066
www.epfindia.gov.in www.epfindia.nic.in
Telephone: 011- 26172685 Fax: 01 l-26173022 Email: rc.fa@epfindia.gov.in

No. Manual/2(1)2016/Claim Form/Part-II/ 3004

Date : 08-May-2017

To

All ACCs (HQ)/ACCs (Zones) &
All RPFCs-lncharge of
Regional Offices.

Sub: Gazette Notification on amendments in EPF, EPS and EDU Schemes Implementation of Draft Benefit Transfer through electronic mode. 

Ref: Mol&E notification No. G.S.R.436(E), G.S.R.437(E) & G.S.R.438(E) dated 4th May, 2017.

Sir/Madam,

Please find enclosed copies of the above said notifications issued by the Ministry of Labour & Employment on amendments in paragraph 72(5)(e) of Employees’ Provident Fund Scheme, 195″”1 paragraph 33 of Employees’ Pension Scheme, 1995 and paragraph 24(3) of Employees’ Deposit Linked Insurance Scheme, 1976.

2. The notifications shall come into effect from the date of its publication in the Official Gazette. As per the amendments, all the payments may be made to the beneficiaries through electronic or digital fund transfer system only. 

Yours faithfully.
sd
(Udita Chowdhary) 
Addi. Central P.F Commissioner (F&A)

Encl: As above

Copy to:
1). ACC(HQ)-IS for necessary modification in the application software accordingly.
2) DD (OL) for Hindi version
3) RPFC (NDC) for web upload.

sd
(Udita Chowdhary) 
Addi. Central P.F Commissioner (F&A)

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Though a majority of organised workers are covered under the Employees’ Pension Scheme (EPS) 1995, there is still very low transparency level. Many readers might not have even heard about it because EPS is not a separate scheme. It is just an add-on to the Employee Provident Fund (EPF) scheme and all EPF members also automatically become EPS members.

The EPS is plagued with several problems. First, the pension provided by it is very low (i.e. minimum pension under EPS scheme now is only Rs 1,000 per month). As per the current structure, pension is fixed based on the formula given below: Average salary for the last 5 years x No of years completed in service 70 All EPF members are eligible for pension after 10 years of contribution to EPS. The pension from EPS is low because the contribution is also low. At present, employees don’t contribute towards EPS. The employer contributes 8.33% of salary ( i .e. basic + Dearness Allowance) towards EPS, the definition of salary here is restricted to Rs 15,000 for employees whose salary (i.e. basic + DA) is above this limit.So for them, the EPS contribution will be restricted to Rs 1,250 per month or Rs 15,000 per annum.

The Rs 15,000 restriction comes at the time of pension calculation as well. If your salary (basic + DA) is above that, pension will be computed only on Rs 15,000. So the maximum pension one can get now (assuming 35 year service) is Rs 7,500.There are reports about EPFO (Employees Provident Fund Organisation) allowing members to contribute more voluntarily to the EPS for getting enhanced benefits after retirement. However, EPS subscribers will be ready to increase their contribution only if the pension is based on the contribution made by the employee throughout the period and not on the number of years last drawn salary . Second, this small pension from EPS (i.e. placed now between Rs 1,000 and Rs 7,500), is not inflation linked like pension for government employees, who joined service before 2004. Since the cost of living increases due to inflation, this “small pension“ now will become “smaller“ in later years.

Third, while employees are complaining about low pension from EPS, the scheme is battling huge deficit. This is because there is no direct linkage between the contribution made by employees and the pension received by them. As of now, EPS is working on the base of new contribution -i.e. contribution from new employees are used to pay the pension for retired ones.Though this may be sustainable for some time because of the demographic dividend in India (i.e. large number of youngsters getting into work force compared to few retired ones), this will not be sustainable in long term. This is because of the expected demographic profile change and the change in employment structure (i.e. more and more companies are hiring people on contract, so they may be outside the EPS ambit). Government doesn’t reveal actuarial valuation of pension liabilities from EPS on regular basis, so only estimates are available on its deficit figures -assumed to be more than Rs 50,000 crore.In addition to cleaning up this mess, government should also release this deficit on regular basis, at least on annual basis, for the sake of transparency .

Source : ET

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