EPFO – Employees’ Provident Fund Organisation (Under Ministry of Labour & Employment, Government of India)

EPFO – Employees’ Provident Fund Organisation (Under Ministry of Labour & Employment, Government of India)

Subject :Polity

Context:

The Government of India established the Employees’ Provident Fund Organization (EPFO) as a statutory entity. The largest social security provider in the nation, it primarily promotes retirement savings among other things. The EPFO was founded in 1951 and is governed by the Ministry of Labour and Employment.

EPFO is one of the World’s largest Social Security Organisations in terms of clientele and the volume of financial transactions undertaken. At present, it maintains 24.77 crore accounts (Annual Report 2019-20) pertaining to its members.

History :

• The Employees’ Provident Fund came into existence with the promulgation of the Employees’ Provident Funds Ordinance on the 15th November, 1951. It was replaced by the Employees’ Provident Funds Act, 1952.
• It seeks to provide for the institution of provident (provident literary means making provision for the future) funds for employees in factories and other establishments. The Act is now referred to as the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 which extends to the whole of India.
• The Act and Schemes framed there under are administered by a tri-partite Board known as the Central Board of Trustees, Employees’ Provident Fund, consisting of representatives of Government (Both Central and State), Employers, and Employees.
• The Central Board of Trustees administers a contributory provident fund, pension scheme and an insurance scheme for the workforce engaged in the organized sector in India (For unorganized there is another scheme).
• The Board operates three schemes –
  • EPF Scheme 1952,
  • Pension Scheme 1995 (EPS) and
  • Insurance Scheme 1976 (EDLI).

1. EPFO Scheme 1952

Salient features of EPFO schemes

• Accumulation plus interest upon retirement and death
• Partial withdrawals allowed for education, marriage, illness and house construction
• Housing scheme for EPFO members to achieve the Prime Minister’s vision of Housing for all by 2022.

2. Pension Scheme 1995 (EPS)

Salient features of the Pension Scheme

• The monthly benefit for superannuation/benefit, disability, survivor, widow(er) and children
• Minimum pension of disablement
• Past service benefit to participants of the erstwhile Family Pension Scheme, 1971.

3. Insurance Scheme 1976 (EDLI)

Salient features of the scheme

• The benefit provided in case of the death of an employee who was a member of the scheme at the time of death.
• Benefit amount 20 times the wages, maximum benefit of 6 Lakh.

Value Addition:

• The Employees’ Provident Fund Organisation (EPFO) is one of the two main statutory social security bodies, the other being Employees’ State Insurance.
• The EPFO administers the mandatory provident fund. It also manages social security agreements with other countries. International workers are covered under EPFO plans in countries where bilateral agreements have been signed. As of May 2021, 19 such agreements are in place.
• The EPFO’s top decision-making body is the Central Board of Trustees (CBT), a statutory body established by the Employees’ Provident Fund and Miscellaneous Provisions (EPF&MP) Act, 1952. As of 2018, more than ₹11 lakh crore (US$157.8 billion) are under EPFO management.
• On 1 October 2014 the Government of India launched a Universal Account Number for employees covered by EPFO to enable Provident Fund number portability.

New Pension Schemes for Unorganised Sector

• Government of India has introduced two voluntary and contributory Pension Schemes, i.e.
  1. Pradhan Mantri Shram Yogi Maan-dhan Yojna, (PM-SYM), a pension scheme  for  the  Unorganised Workers and
  2. National Pension Scheme for  the  Traders and  Self Employed  Persons (NPS-Traders)  (for  the Vyapari’s) under section 3(1) of  Unorganised  Workers Social Security  Act, 2008 to  provide  old  age  protection  to them.