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EPFO may reduce provident fund contributions to 10%

LiveMint logoLiveMint 26-05-2017 PTI

New Delhi: Trustees of retirement fund body Employees’ Provident Fund Organisation (EPFO) may approve a proposal on Saturday to reduce the mandatory contributions toward social security schemes run by it to 10% for workers as well as employers.

Presently, employees and employers contribute 12% of basic wages each towards the Employees Provident Fund Scheme (EPF), Employee Pension Scheme (EPS) and Employee Deposit Linked Insurance Scheme (EDLI). The proposal to reduce the contributions by employers and employees to 10% of basic wages, including basic pay and dearness allowance, is listed on the agenda for an EPFO meeting scheduled on 27 May in Pune, a source said. The source said the labour ministry received several representations stating that the move will leave more money with workers for expenditure and reduce employers’ liability, which will eventually perk up the economy.

However, trade unions have decided to oppose the proposal, saying this will dilute these social security schemes. EPFO trustee and Bharatiya Mazdoor Sangh leader P.J. Banasure said, “We will oppose this proposal. This is not in workers interest.”

At present, an employee’s entire 12% contribution is deposited into their EPF account. Besides, 3.67% is also contributed to the EPF account by the employer who also contributes 8.33% of basic wages to the EPS account. That apart, the employer also contributes 0.5% of basic wages towards the EDLI for insurance benefit. Thus, the employer eventually contributes 12.5% of basic wages.

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