How Does the New PF and Pension Rule Affect International Workers' Retirement Plans?

Notification on Amendment to Employees' PF and Pension Schemes

I am attaching a notification dated 3.9.2010 amending the Employees' PF and Pension Schemes. According to the amendment, international workers will be permitted to withdraw the balance in their account only after retirement at the age of 58 years and not upon migration from India for permanent settlement abroad as it stands currently, except in the following cases:

1. Retirement due to total disablement/incapacity to work.
2. Suffering from leprosy, cancer, tuberculosis.
3. Any other grounds specified in the Social Security Agreement (SSA) under which IW is covered.

Regards,
PC Agrawal
Aurangabad

Dear Rajan Associates, Do you think expatriate workers will keep track of and avail refunds of their contributions upon attaining the age of 58 years?

Thank you.

This is very bad in concept and will not stand the test of law in court. The EPF department is very scheming and just wants to keep the money both ways under the guise of social security. An expatriate working in India at 30 years of age will go back in 3 years and be 33 years old. In the next 25 years, when he attains 58 years of age, he may leave the company working in Alaska or die. How will he or anybody keep track? For information, expatriates do not contribute to the EPF account. They are clear about the salary they want, with or without deductions. The company pays 24% of the contributions, and ultimately, the company is the loser, and the cost of expatriate employees has gone up by this step. We are thinking of challenging this in court; let us see... Again, the contribution to the Fund without a ceiling is also bad in law. Indian employees have a ceiling of Rs. 6500/-, while expatriates have no ceiling. We do not understand the difference, except that the EPF department wants to add more and more money by all means to its kitty!

Understanding Treatment of International Workers

Keen to understand whether an International Worker who is also a Person of Indian Origin and an Indian resident would or should be treated differently. Why would normal provisions for, say, retrenchment not apply?

Significance of Bilateral Agreements

Also, concerning the significance of bilateral agreements - what about, say, a Belgian national working for a Swiss company, having been sent on an India assignment by a UK subsidiary and then retrenched and remaining in India - under the current status, that person would end up paying national insurance in the UK as well as PF contributions in India.

Seeking Clarification on Legislation

Further insight into the principles behind this legislation is appreciated. Who should be approached officially to seek clarification?