EPFO Account Holders Alert: There is an important news for private sector workers which can have a direct impact on their pockets.
Top officials of the Labor Ministry have suggested to the Parliamentary Committee on Labor that the existing system e scrapped to keep pension funds like EPFO viable. He has emphasized on a defined contribution regime rather than defined benefits. That is, PF members will get a benefit according to their contribution.
According to sources, the officials told the parliamentary committee on Thursday that the EPFO has more than 23 lakh pensioners who get a pension of Rs 1000 every month. While his contribution to PF was less than a quarter of it. He argued that if the system of defined contributions was not adopted, it would not be practical for the government to support it for a long time.
No increase Pension
EPFO’s Central Board of Trustees had recommended raising the minimum pension from Rs 2000 to Rs 3000 in August 2019. But the Labor Ministry did not implement it. The Parliamentary Committee had responded to the Labor Ministry in this regard. Sources told the Times of India that raising the minimum pension to Rs 2000 would cost Rs 4500 crore. If it is increased to Rs 3000, then the government will incur an additional burden of Rs 14595 crore.
At Thursday’s meeting, officials acknowledged that a large proportion of EPFO invested in the stock market turned out to be a bad investment. The slowdown in the economy due to Covid-19 pandemic gave negative returns on these investments. Officials said that out of the fund corpus of Rs 13.7 lakh crore of EPFO, only 5% i.e. Rs 4600 crore has been invested in the market. According to officials, the government is trying to ensure that EPFO funds can be avoided by investing risky products and schemes.