Rise in eligibility limit of EPF Scheme gives a big jolt to employers and employees

Government of India has raised the eligibility limit of Employee Provident Fund Scheme from exiting Rs. 6500 P.M. to 15000 P.M. This has given a big jolt to employers as well as employees. This is the 8th revision since the start in 1952. Last revision was done in 2001 from Rs. 5000 P.M. to 6500 P.M.
The revision has been done in haste and under compulsion. It is learnt that E.P.F.O is short of funds for paying pension to the employees. Finance Minister in his budget has committed a minimum monthly pension of Rs. 1000 P.M. under the E.P.F Scheme.
In order to make up for the shortage of fund the limit has been sharply raised from Rs.6500 P.M to 15000 P.M.
Industry is passing through slow down phase with tight liquidity. Industry will not be able to pay additional amount. The rise will have 2-3% increase in the wage cost of the employers.
Employees hesitate to contribute their share of P.F. Thus there will be tensions between employer & employee and employer may have to pick up the burden of employees share.
The employees generally do not prefer to contribute to E.P.F. They want more cash at hands. This may be due to inflationary regime.
Such rises usually take place in the beginning of the Financial Year because wage rises are generally done in the April by the industrial establishment. The mid way decision will have additional cost of wages to the industry.
Employees prefer new National Pension Scheme N.P.S where yield is much better. The yield through E.P.F.O is comparatively very small because investments are made in the secure bonds.
In this regard I have written a letter to the Union Labour Minister and Prime Minister.
(The Author is Ludhiana-based industrialist and President of Apex Chamber of Commerce & Industry (Pb.)
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