Employees Provident Fund Organization
Employees Provident Fund Organization i.e. EPFO is preparing to make major changes related to pension of employees. According to media reports, EPFO is preparing a proposal to increase the salary limit from Rs 15,000 to Rs 25,000. If this change is implemented, more than 1 crore employees across the country will come under the ambit of EPS pension. The limit of Rs 15,000 per month remains unchanged since it was increased from Rs 6,500 in 2014. No amendments have been made in it since then.
A salary limit is fixed under the pension scheme EPS in EPFO. Currently this limit is Rs 15,000 per month. This simply means that even if the salary of an employee is Rs 25,000, Rs 40,000 or more, the pension is calculated on the basis of only Rs 15,000. Now it is proposed that this limit be increased to Rs 25,000. This will increase the pension base even if the salary is high and the pension amount will be better in future.
Changes in the old system necessary!
At a business event in Mumbai, Department of Financial Services Secretary M. Nagaraju stressed the need for this review to be expedited. He said that it is very sad that so many people earning a little more than Rs 15,000 do not come under the ambit of pension and when they grow old they have to depend on their children. He said that it is necessary to change the old boundaries, because they do not reflect the income situation of today’s India.
According to the current rules, only those employees whose basic salary is up to Rs 15,000 are included in EPF and EPS. Those earning even a little more than this may be left out of the scheme and there is no pressure on companies to include them. Due to this, many private employees working in cities are not able to have solid savings for retirement, despite their low salaries.
New changes in EPS
Many important changes have been made in the Employee Pension Scheme, the purpose of which is to increase the long-term security of the employees and strengthen the pension system. The biggest change is that the waiting period for withdrawing the EPS amount has been increased from 2 months to 36 months. This means that employees will now be able to withdraw their EPS amount only if they do not work for 3 years or remain unemployed. The aim of this move is to prevent premature withdrawals and encourage people to remain invested for a long time, so that they can get pension throughout their life.
Another important thing is that the government is again reviewing the minimum pension limit of Rs 1,000 per month. There has been no change in this for the last 11 years. The Parliamentary Committee on Labor has advised to increase it and it is expected that it will be announced soon. This will provide relief to pensioners troubled by rising inflation.