Social Security Code Implementation for EPF, EPS, and EDLI
The Union Labour and Employment Ministry has notified new rules for the Employees’ Provident Fund (EPF), Employees’ Pension Scheme (EPS), and Employees’ Deposit Linked Insurance (EDLI) as part of implementing the Code on Social Security, 2020.
Background and Current Framework
- The new rules signify a procedural update to align with the Social Security Code that combines nine previous laws, including the Employees’ State Insurance Act, 1948, and the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
- The EPFO's Central Board of Trustees endorsed these measures to harmonize with the Code, impacting approximately eight crore subscribers.
Key Features and Historical Context
- The notification reflects a continuation of existing practices, such as allowing voluntary contributions beyond the statutory wage ceiling of ₹15,000.
- Previously, contributions up to 12% of basic pay, regardless of wage ceilings, were standard until financial constraints during the COVID-19 pandemic led establishments to limit contributions.
Issues and Subscriber Concerns
- Pensioners and members expected changes to the minimum monthly pension and wage ceiling for PF contributions, both unchanged for 12 years.
- Out of 81.5 lakh pensioners, 36.8 lakh receive a pension of ₹1,000 or less per month.
Financial and Policy Implications
- The government's grant-in-aid for the minimum pension, benefiting about 20.6 lakh pensioners, totals roughly ₹1,000 crore annually.
- From the ₹11,000 crore allocated to EPS, most funds cover government contributions of 1.16% of monthly pay (capped at ₹15,000).
- The government is urged to extend EPS coverage to all workers, regardless of pay, and consider creating a scheme in collaboration with the Pension Fund Regulatory and Development Authority.
- The necessity for prompt and simplified claim settlements is emphasized.
The government is reminded of the significant impact of EPFO decisions on millions of employees.
