There is big news for about 6 crore EPFO members. The Modi government may segregate the provident fund and pension accounts of formal sector employees covered by the Employees’ Provident Fund Organization (EPFO) to safeguard monthly pension payments. According to two government officials, the government wants to do this because when employees withdraw their provident fund, they also withdraw money from their pension fund, as PF and pension are part of the same account.
The problem of rising unemployment has become acute with the pandemic. After the outbreak of the pandemic last year, till 31 May 2021, a total of 70.63 lakh employees have withdrawn money under Kovid Advance. About 3.90 crore claims have been settled by EPFO from 1st April 2020 till 19th June 2021. Out of 24% statutory EPFO contribution every month by both employees and employers, 8.33% is EPS (Employees Pension Scheme) and balance EPF goes in. While withdrawing from EPFO for any reason, subscribers often withdraw all their savings including pension amount. According to the government, this defeats the purpose of retirement pension benefit provisions.
“Under EPFO, there should be two separate accounts in PF and pension schemes. While, as per law, there should be no problem in withdrawing PF funds when required, the pension account should ideally be kept untouched. This will increase pension income and offer better social security coverage.” The official said that the matter was discussed in the EPFO board meeting earlier this year after an internal government panel advised segregation of EPF and EPS accounts. was discussed.
Brijesh Upadhyay, member of the Central Board of EPFO, said, as the second wave of Kovid-19 subsides, you will see more action on this front. He says, “At present, EPFO subscribers are in a pool account system. A separate account is needed for EPF and pension. People are demanding more pension and for that the best solution is to separate both the accounts. Once they are separated, a subscriber can contribute more to the pension and become eligible to receive more pension after retirement.
Upadhyay said there is a possibility of two separate schemes – one for those earning less than the salary limit of Rs 15,000 per month and the other for all those subscribers who are earning more. The government is currently part of the Employees’ Pension Scheme of EPFO. It contributes 1.16% to the pension of each PF member earning a monthly salary of less than Rs.15,000/-.
