EPFO

EPFO

TOPIC: Economy

Context- The return on workers’ retirement savings parked with the Employees’ EPFO has been slashed to 8.1% for 2021-22 from the 8.5% rate credited to members’ accounts in the past two years.

Concept-

• The cut in the EPF rate, at a time when inflation is resurging, attracted criticism from the central trade union representatives on the Board who called for the 8.5% return to be retained.
• Employee representatives had also opposed the last rate cut on EPF savings from 8.65% in 2018-19 to 8.5% in 2019-20.

About EPFO:

• Employees’ Provident Fund Organisation is a government organization that manages provident fund and pension accounts of member employees and implements the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
• It is administered by the Ministry of Labour & Employment, Government of India.
• It is one of the World’s largest Social Security Organisations in terms of clientele and the volume of financial transactions undertaken.
• It operates three schemes –
  • EPF Scheme 1952,
  • Pension Scheme 1995 (EPS) and
  • Insurance Scheme 1976 (EDLI).

Employees Pension Scheme (EPS):

• It is a social security scheme that was launched in 1995.
• The scheme, provided by EPFO, makes provisions for pensions for the employees in the organized sector after the retirement at the age of 58 years.
• Employees who are members of EPF automatically become members of EPS.
• Both employer and employee contribute 12% of employee’s monthly salary (basic wages plus dearness allowance) to the Employees’ Provident Fund (EPF) scheme.
• EPF scheme is mandatory for employees who draw a basic wage of Rs. 15,000 per month.

***For further Reading Refer to DPN 21 November 2021.