Labor Ministry Proposes To Increase Take-Home Salary By Reducing PF Contribution But Preparing To Reduce Pension
New Delhi, January 8, 2021: The Labor Ministry has suggested to the Parliamentary Committee something which, if accepted, can increase the take home salary of the employed people but may cause loss to the pensioners. The Ministry of Labor has suggested reducing both employee and employer contribution to Employee Provident Fund (EPF) from 12% to 10%.
Apart from this, the Ministry suggested making the pension for EPF members practical, saying that the pension should be received according to the contribution. If both these suggestions are accepted then the take-home salary of the employed people will be increased, but the pension of EPFO pensioners will decrease.
According to the Times of India report, senior officials of the Labor Ministry told the Parliamentary Committee that EPFO has more than 23 lakh pensioners who get a pension of Rs 1000 every month, while their contribution to PF is one-fourth of it. These officials argue that if the pension system is not made contribution-based, it will be difficult for the government to run it for a long time.
In fact, the Central Board of Trustees had last year questioned the Ministry of Labor that it was recommended to increase the minimum pension amount to Rs 2000 or 3000 in August 2019 under the EPF pension scheme, but why it was not implemented. Sources said the ministry said that raising the minimum monthly pension to Rs 2,000 per subscriber would lead to an additional financial burden of around Rs 4,500 crore and if it was increased to Rs 3,000 per month, the burden would be Rs 14,595 crore.
At Thursday’s meeting, officials acknowledged in front of the committee that a portion of the EPFO funds invested in the stock markets turned into bad investments and these investments incurred losses due to the turmoil in the Corona era. Sources said that the officials told the committee that out of the total fund of Rs 13.7 lakh crore of EPFO, only Rs 4,600 crore i.e. only 5% of it is invested in the markets.
