Provident Fund: Your pension kitty hike hinges on outcome of March 4 meeting
With the government looking to bring more people under social security net, it may take a decision on increasing the Basic pay ceiling
There could be some good news in store for subscribers of the Employees Provident Fund Organization (EPFO).
At the Central Board of Trustees meeting scheduled to be held on March 4, 2021, some important decisions related to your PF pension are expected to be taken.
With the government looking to bring more people under social security net, it may take a decision on increasing the Basic pay ceiling. The Central Board of Trustees of EPFO will decide on the blue print first. After this, its recommendations will be sent to the Labour Ministry.
The Labour Ministry will then prepare its draft and send it to the Finance Ministry.
What is basic salary ceiling?
Right now, the ceiling is Rs 15,000. If a person’s basic salary is Rs 30,000, then 12% of his contribution on that salary is deposited in the Provident Fund. The same share is also from the account of the employer. However, the share of the employer has two parts. First – EPF and second- Pension (EPS). At present, 12% of the share of the employer is deposited on basic salary of Rs 30,000. However, the basic salary ceiling in pension fund is Rs 15,000. Due to this ceiling, 8.33% of the basic salary (15000) is deposited – Rs 1,250. If the ceiling increases, then this share will be fixed at the limit of Rs 25,000. So, Rs 2,083 rupees will be deposited in the pension fund.
According to E. Raghunathan, trustee of EPFO, discussion on the proposal is included in the agenda of the meeting of the Central Board of Trustees. However, the agenda has not been made public yet.
Apart from increasing the pension fund, the other advantage is that for those who have salary over basic salary ceiling, the contribution of PF is optional. In such a situation, more people will come in this circle.
6 crore people will get benefit
According to AK Shukla, retired assistant commissioner of the Employees Provident Fund Organization, if this decision is made, then over 6.5 crore EPFO subscribers will benefit from it. First, more people will come under its purview and second the share of the employer will increase, then the pension fund will also increase. However, it may take time to implement this decision.
Sources said members of the Central Board of Trustees are in favour of increasing the salary ceiling of PF.