WAGE CEILING FOR PF COVERAGE TO BE RAISED TO RS.15,000 Per Month Also Monthly Pension Rs.1000 Per Month

yatin Pundhir
WAGE CEILING FOR PF COVERAGE TO BE RAISED TO RS. 15,000 per month

Also, a monthly pension of Rs. 1,000 per month.

The Finance Ministry has approved a proposal to provide a minimum monthly pension of Rs. 1,000 to workers in the organized sector, a move that would benefit 27 lakh pensioners immediately. The ministry has also approved a proposal to raise the basic wage ceiling under the Employees Provident Fund Scheme to Rs. 15,000 from the existing Rs. 6,500 per month.

Currently, there are about 44 lakh pensioners. Of these, 27 lakh, including 5 lakh widows, receive less than Rs. 1,000 a month. The government will provide an additional contribution of Rs. 1,217 crore to ensure a minimum monthly pension of Rs. 1,000 starting in 2014-15. Pensioners are, therefore, expected to benefit from this starting April 1 this year.

Labour Minister Oscar Fernandes, however, is yet to decide whether the move requires Cabinet approval or not. The Labour Ministry's proposal to provide a minimum monthly pension of Rs. 1,000 under the EPS-95, managed by the Employees' Provident Fund Organisation (EPFO), has been pending for a long time.

Previously, the Labour Ministry had proposed that the government should increase the contribution to EPS-95 from 1.16 percent of the basic wage to 1.79 percent to ensure a minimum pension. However, this proposal was not favored by the Finance Ministry as it would have led to a permanent increase in its contribution.

In its revised proposal, the Labour Ministry has requested the Finance Ministry to allocate around Rs. 1,217 crore additional funds every year and indicated that this amount could decrease over time as more members subscribe to EPS-95.
Saunee
Thank you, Yatin, for providing this instant information. Here is the print media of the same information.

My doubt is, as the pension revision will take effect from 1st April 2014, will the EPF limit increment also be effective from 1st April 2014 only?
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ajay2006_co
Dear All,

Please find the notification copy for review, which has been approved by the central government.

Regards, Ajay Sharma
mukesh saini
Dear All,

A scanned copy of Dainik Jagran dated 24.01.2014 is attached for your reference.

Thanks, Mukesh Kumar Saini
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abhijithazra
Hi All,

Retirement fund body EPFO's trustees on February 5 will decide on amending its scheme to provide a minimum monthly pension of Rs 1,000, which will immediately benefit its 27 lakh pensioners.

The Central Board of Trustees (CBT), the apex decision-making body of EPFO, will also decide on amending EPF scheme 1952 to raise the monthly wage ceiling to Rs 15,000 to cover more workers under its various social security programs like provident fund, pension, and employee deposit-linked insurance.

At present, workers getting basic wages, including basic pay and DA, of up to Rs 6,500 are covered under the ambit of Employees' Provident Fund Organisation (EPFO).

"The Finance Ministry has approved the Labour Ministry's proposal to provide a minimum pension of Rs 1,000 per month and enhance the wage ceiling to Rs 15,000. Now, the trustees would meet on February 5 to approve the amendment in schemes run by EPFO to operationalize the two decisions," an official source said.

The Central Board of Trustees (CBT), the apex decision-making body of EPFO, had earlier approved the proposal, following which the Labour Ministry pursued it with the Finance Ministry.

According to sources, after the nod given by the CBT, headed by the Labour Minister Oscar Fernandes, the two proposals would be put before the Union Cabinet for approval as the government would have to make provision of funds for the purpose.

The source further said that Finance Minister P Chidambaram may also make an announcement on the entitlement of a minimum monthly pension of Rs 1,000 in his interim budget next month.

The entitlement of a minimum monthly pension of Rs 1,000 to workers in the organized sector under the Employees' Pension Scheme 1995 (EPS-95) would benefit 27 lakh pensioners immediately.

At present, there are about 44 lakh pensioners. Of these 27 lakh, including 500,000 widows, get less than Rs 1,000 a month.

The other proposal for raising the basic wage ceiling under the Employees Provident Fund Scheme to Rs 15,000 from the existing Rs 6,500 per month is expected to bring in 50 lakh more workers under the ambit of schemes run by the EPFO.

The government would have to provide an additional amount of Rs 1,217 crore (Rs 12.17 billion) to ensure the minimum pension of Rs 1,000 starting 2014-15. Pensioners are, therefore, expected to get a benefit with effect from April 1 this year.

The Labour Ministry in its revised proposal has asked the Finance Ministry to provide around Rs 1,217 crore additional amount every year and indicated that this amount can come down over a period of time with more members subscribing to EPS-95.

At present, the government contributes 1.16 percent of the basic wage of workers as a contribution toward the EPS-95. The government had provided around Rs 1,400 crore for the purpose in 2012-13.

The decision of enhancing the wage ceiling would also have some financial implications as the government's contribution towards EPS-95 would increase towards EPS-95 as 50 lakh more workers would join the schemes run by EPFO.
sumitk.saxena
Hi All,

The news has been circulated in various national dailies. Let this proposal get approval from the Ministry of Finance, and the gazette should be published for enforcement. Only after that, the rule becomes a law.

Thanks & Regards,

Sumit Kumar Saxena
raghavant
Hi all,

This proposal has been pending for a long time. Even now, I don't think this government will be able to push it through before the election. Meanwhile, the value of Rs1000 has eroded to an extent that this amount now looks like peanuts, and probably by the time this is actually implemented, this may not even be sufficient to buy your milk for a month.

I have a few doubts; if anyone has answers, please elucidate.

1: Currently, pension is paid to widows & children under 25 years in case of the member's death while in employment. All are pensioners, will all of them get Rs 1000 minimum?

2. It appears that only the minimum pension is increased, which means that one who receives even a rupee more than 1000 will continue to get that same amount only, or is there a proposal to increase pensions across the board?

3. Anyone who receives updates on this, please keep posting on this forum.

4. I hope this gets implemented immediately before it gets entangled in political upmanship & before the elections are announced so that it does not get held up again in model conduct issues.
harpreetwalia
Guys, don't confuse yourselves with this. This has not been turned into a final law. It has been passed by the Ministry of Labour; however, it has been forwarded to the Ministry of Finance. After passing through there, it would require cabinet approval. This process will take some time.

Regards,
Harpreet Walia.
Kamal Datta
Finance Ministry approved the proposal only. It is not yet passed by the Union Cabinet. So let it be passed first, then it will be applicable. A newspaper cutting is news only; it is not a law. The Official Gazette published by the Union Cabinet is the only authentic document supporting its applicability. I think it will be passed by the Union Cabinet before the announcement of the 2014 Lok Sabha Election, but till then, the existing law is applicable.
darshanpalkar
Please refer to the attachment for more information.

Regards,
Darshan Palkar
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Kamal Datta
Everything is accepted, but where is the India Govt Gazette? You cannot work on these documents. I agree with you that it is approved by the Finance Ministry... But it will come into force the moment it is passed by the Union Cabinet.
bhavik_kk
Hi all,

With the Lok Sabha Election 2014 underway, I assume that this issue will surely get entangled. The proposal made by the Labour Ministry has asked the Finance Ministry to provide an additional 1217 crores, which is indeed a significant amount.
yatin Pundhir
PROVIDENT FUND UPDATE

January 2014

Editor's Note

The number of beneficiaries and the volume of financial transactions undertaken by the Employees’ Provident Fund Organisation (EPFO) is the largest in the country. Its total assets is more than Rs. five lakh crore as on 1st May, 2013. This money belongs to the investors-employees and employers. Every organisation that employs 20 or more employees is obligated to be the investor. The scheme must enjoy the confidence and approval of all stake holders as far as its methods, fairness and integrity is concerned and that is how it can meaningfully contribute to the economic and social well being of members.

Despite all claims about improvements in the function of the organisation, we often hear about the alleged malfunctioning and the cases of corruption in the organisation. There has been a report in the Economic Times that out of 107.16 Lakh PF claims received during 01.04.2012 to 13.12.2012, around 7 lakh claims are pending for settlement. As per the provisions contained in para 72(7) of the Employees’ Provident Funds Scheme, 1952, all claims found in order are to be settled within 30 days but this time limit is hardly adhered to.

It is not that only employees have to run from pillar to post but the employers are also aggrieved by the provident fund authorities. Most of the employers are unaware that there is an EPF Appellate Tribunal (Delhi) – the only one for whole of India where they can file their appeals. What the Tribunal has been deciding is summarized below, which will be informative to know in order to ward off harassment by the provident fund authorities.

HIGHLIGHTS OF ORDERS OF EPF APPELLATE TRIBUNAL

COVERAGE OF ESTABLISHMENT EMPLOYING BELOW 20 PERSONS SET ASIDE

M/s. Sh. Mahabaleshwara Auto Industries (P) Ltd. vs. APFC, Bangalore, ATA No.793(6) 2005, decided on 26.12.2013

In an appeal filed before the Employees’ Provident Fund Appellate Tribunal, the appellant has challenged the orders dated 09.05.1997 and 18.12.1991, passed by the EPF Authority, under section 7-A of the Act, covering the establishment of the appellant for compliance of the Act as well as for determination of the PF dues.

The plea taken by the appellant is that it had never engaged more than 14 employees. Services of 3 security guards were engaged through a contractor M/s. Ex. Soldiers Industrial Security Services, covered under the Act.

The employees, already covered under the Act by their employer, cannot be counted again for covering the establishment of the appellant under the Act. Hence, impugned order is set aside. Appeal is allowed.

ARREARS OF WAGES - NOT TO ATTRACT INTEREST/DAMAGES

M/s. HSIL Ltd. vs. RPFC, Hyderabad, ATA No.561(1) 2012, decided on 6.11.2013

The appellant filed an appeal before the Employees’ Provident Fund Appellate Tribunal, questioning the validity and legality of order dated 15.05.2012, passed by the EPF Authority, under section 14-B of the Act, imposing interest and damages on account of delayed remittance in respect of arrears of wages paid later on in compliance of a settlement between the employer and the workmen/union.

‘Actually drawn’ must be understood as actually due, payable and drawn, if the disbursement has not occasioned, it must be understood as liable to be drawn and payable when they become due and payable. Accordingly, the levy of damages in the case in hand is contrary to the law settled by the Andhra Pradesh High Court and the impugned order is set aside. Appeal is allowed.

DAMAGES FOR LATE DEPOSIT SUSTAINED BUT INSTALMENTS ALLOWED

M/s. Air Force School vs. APFC, Bangalore, ATA No. 06(06) 2012, decided on 24.12.2013

The appellant filed an appeal before the Employees’ Provident Fund Appellate Tribunal, questioning the order dated 17.11.2011, passed by the EPF Authority, under section 14-B of the Act, levying damages for late deposit of PF dues on the ground that impugned order is arbitrary, illegal and pre-determined whereas the default of the appellant was not wilful.

The EPF Appellate Tribunal concluded that since the appellant had admitted the delayed remittance of dues, to remit the damages in instalments, hence appellant is permitted to deposit the damages and interest in 10 equal monthly instalments.

TRAINEES UNDER STANDING ORDERS ARE NOT EMPLOYEES TO BE COVERED

M/s. ISS Catering Services (South) Pvt. Ltd. vs. APFC, Chennai, ATA No.44(13) 2011, decided on 8.11.2013

The appellant filed an appeal before the Employees’ Provident Fund Appellate Tribunal, challenging the order dated 31.12.2010, passed by the EPF Authority, under section 7-A of the Act, determining the EPF dues in respect of trainees engaged on the basis of Certified Standing Orders.

The EPF Appellate Tribunal has held that the trainees were appointed and certification of Standing Orders was obtained subsequently. So long as the Standing Orders were not certified by the competent authority, the trainees appointed shall be governed by Model Standing Orders incorporated in the Industrial Establishment (Standing Orders) Act, 1946.

EXCLUDED EMPLOYEES NOT ENTITLED TO BE MEMBER OF PENSION SCHEME

M/s. Manikgarh Cement vs. RPFC, Nagpur, ATA No.529(9) 2011, decided on 6.12.2013

An appeal was filed before the Employees’ Provident Fund Appellate Tribunal, by the appellant, against the order dated 30.06.2011, passed by the EPF Authority, under section 7-A of the Act on the ground that the assessment of EPF dues in respect of ‘unrolled employees’ by the EPF Authority, is wrong and illegal.

The EPF Appellate Tribunal observed that it is an admitted fact by both the parties that the wages of the employees are above the prescribed limit of ‘excluded employees’ i.e. Rs.6500 per month. Such employees are to be treated as ‘excluded employees’ in view of para 2(f) of the Scheme. Even the excluded employees who attended the proceedings conducted under section 7A of the Act stated not to be interested in pension scheme, as per paragraph 26(6) of the Scheme, 1952. Hence, the impugned order is not sustainable and quashed.

NO INTEREST OR DAMAGES WHEN DEFAULT IS NOT WILFUL

M/s. Looksan Tea Estate vs. RPFC, Jalpaiguri and Another, ATA No.468(15) 2012, decided on 25.11.2013

The appellant filed an appeal before the Employees’ Provident Fund Appellate Tribunal, questioning the validity and legality of orders, passed by the EPF Authority, under section 14-B of the Act, imposing damages and interest on account of delayed remittance whereas the appellants have been suffering losses and delay was not wilful.

It is settled position that a penal provision should be construed strictly. Levy of damages cannot be construed as imperative by the reason of an enabling provision. After amendment to Para 32A of the EPF Scheme with effect from 26.09.2008, the damages are to be levied at the lower rate by excluding the element of interest included earlier. In the impugned order, the EPF Authority has not indicated the reasons for delay in remittance of EPF dues attracting levy of damages. There is no finding by the EPF Authority to establish that the appellant had unlawfully diverted the funds collected from the employees for its business use. Since there is no mens rea on the part of the appellant, damages or interest should not be levied. Hence, the impugned order is set aside.

DEFAULT IN DEPOSIT WHEN NOT WILFUL, PENAL DAMAGES UNJUSTIFIED

M/s. Shiv Herbal Research Laboratory Ltd. vs. APFC, Nagpur, ATA No.103(09) 2007 decided on 21.11.2013

The appellant filed an appeal before the Employees’ Provident Fund Appellate Tribunal, challenging the order dated 11.12.2003, passed by the EPF Authority, under section 14-B of the Act, levying damages and interest for delayed remittance of PF dues without giving opportunity of hearing, which is illegal.

Since the EPF Authority has failed to prove on record the wilful default on the part of the appellant, levy of damages be restricted to 25% of the actual amount of damages levied under the impugned order. The appeal is disposed of accordingly.

LEVY OF DAMAGES - REDUCED TO 5% WHEN DEFAULT NOT WILFUL

M/s. Kattima Export vs. APFC, Chennai, ATA No.293(13) 2012, decided on 29.11.2013

The appellant filed an appeal before the Employees’ Provident Fund Appellate Tribunal, questioning the order passed by the EPF Authority, under section 14-B of the Act, levying damages and interest for delayed remittance of PF dues on account of poor financial condition.

In the impugned order, the EPF Authority has not indicated the reasons attracting levy of damages. Since there is no mens rea on the part of the appellant, levy of damages be restricted to 5% of the actual amount of damages levied under the impugned order. Hence, the appeal is disposed of accordingly.

HIGHLIGHTS OF THE JUDGMENTS OF HIGH COURTS AND SUPREME COURT

An order passed by the EPF Authority under section 7-A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, without affording an opportunity to be heard to the employer for submitting his defence, is liable to be quashed.

Rallis India Ltd. vs. The Asst. Provident Fund Commissioner & Ors., 2014 LLR 25 (Bom. HC)

An order passed by the EPF Authority determining the EPF dues towards employer and imposition of interest thereon for belated remittance is a composite order under Sections 7-A and 7-Q of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and is appealable before the EPF Appellate Tribunal.

Arcot Textile Mills Ltd. vs. The Regional Provident Fund Commissioner and Ors., 2014 LLR 89 (SC)

When the evidence recorded by the Trial Court reveals that no cogent evidence has been placed and proved on record by the EPF Authority i.e. complainant to substantiate that during the material time, firm of the respondents was working, employing a particular number of workers etc., the question of depositing the EPF contributions by the employer does not arise.

Regional Provident Fund Commissioner vs. Atma Ram and Sons and Anr., 2014 LLR 29 (P&HHC)

Unless the issue with regard to contribution, as pending before the EPF Appellate Tribunal, is decided, the petitioner cannot be directed by the Employees Provident Fund Authority to pay interest and damages.

Guru Nanak College, Chennai vs. Assistant Provident Fund Commissioner, Chennai and Others, 2014 LLR (SN) 110 (Mad. HC)

No appeal Section 7-I of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 is maintainable for challenging the order, passed by the EPF Authority, imposing only interest under Section 7-Q of the Act.

Arcot Textile Mills Ltd. vs. The Regional Provident Fund Commissioner and Ors., 2014 LLR 89 (SC)
bcarya
Dear All,

If any of the members have received a copy of the notification, please kindly share it here. Until the notification is issued, it cannot be implemented. Some newspapers have claimed that the wage ceiling revision has been approved by the finance ministry, but there is no information available regarding its effectiveness. However, it is clearly stated that the pension revision will be effective from 01-04-2014. Therefore, it is advisable to wait for the official notification before implementing any changes, as we are also accountable to the management.

Thank you.
abhaykgoel
Dear All,

Kindly provide us with a copy of the Government Order (G.O.).
Kamal Datta
How can you get a copy as it was not passed by the Union Cabinet? Friend, always remember that this type of notification can only be published after approval by the Union Cabinet through a vote of confidence. So, just wait and see what is going to happen. But it's for sure that this bill will be passed before the declaration of the next Lok Sabha Election because this kind of bill can work as a vote bank.
Kamal Datta
The comments posted by Mr. Yatin Pundhir are good. It can help us increase our knowledge. However, I regret to say that the same posting is not relevant to the main topics, and it can create unwanted confusion among the members. I request that the content be more specific and simple so that all general members can easily digest the topics.
sourav.rubi@gmail.com
Useful update. Let these proposals be endorsed by the Central Govt.

Warm regards, Sourav Mukherjee
Ms Chakrapani
Dear Seniors,

As per the latest decision from the Central Board of Trustees regarding raising the monthly wage ceiling to Rs. 15,000/- from Rs. 6,500/-, we would like to know when this law will be applicable. To our knowledge, the law was passed on February 5th, 2014, but there is no mention of its effective date.

Kindly revert.

Thanks & Regards,
Ms. Chakrapani
yatin Pundhir
Provident Fund Coverage at Rs.15,000 and Minimum Monthly Pension Rs.1,000 to Start Soon

The Central Board of Trustees (CBT), the apex decision-making body of Employees' Provident Fund Organisation on 5th February 2014, has decided to amend Employees' Provident Fund Scheme to raise the monthly wage ceiling to Rs.15,000 from Rs.6,500 for coverage of an employee.

According to EPFO, the Finance Ministry has already approved the Labour Ministry's proposals for entitlement of a minimum monthly pension of Rs.1,000 and enhancing wage ceiling for coverage to Rs.15,000 per month.

Provident Fund Update

The Employees Provident Fund Organization (EPFO) is afflicted with inefficiency and opacity leading to unmitigated hardships to all stakeholders despite the fact that the administrative charges are paid by the employers along with the contributions. In view of the glaring lacunas in the Act and inefficient management of the Organization, judicial interpretations come to the rescue. We summarized the judicial interpretations of 2013, which are produced below.

Highlights of Orders of EPF Appellate Tribunal as Digested in 2014:

- Damages waived in the absence of proper inquiry and identification of beneficiaries
- Loss-making company permitted to deposit outstanding in installments
- 20% towards labor charges in the cost of construction - to be set aside for want of identification of beneficiaries
- Determination of dues without making physical verification and identification of beneficiaries - to be quashed
- Damages untenable if default in deposit is not willful
- Coverage of establishment employing less than 20 persons set aside
- Arrears of wages - not to attract interest/damages
- Trainees under model standing orders are not employees to be covered
- No interest or damages when default is not willful
- Excluded employees are not entitled to be a member of the pension scheme
- Default in deposit when not willful, penal damages unjustified
- Damages for late deposit sustained but installments allowed
- Levy of damages - reduced to 5% when the default is not willful
- 5% damages appropriate when the delay in the deposit of dues is not willful
- Coverage of a trust needs fresh consideration
- Levy of damages without considering the reasons for delayed deposit to be re-examined
- International workers when availing benefits of PF and pension - not to be covered in India
bejjiguruvishnu
Greetings all!

If the Bills are passed, what will be the employer contribution ceiling in PF? Is it 1800?
chithiravel
Dear All,

Hereby, I have attached the EPFO circular dated 28/08/2014, in which a notification regarding an enhanced statutory wage ceiling to Rs. 15,000/-, a minimum pension of Rs. 1,000/- per month, and a 20% additional relief on the amount of assurance benefit admissible under the EDLI Scheme has been announced for implementation.
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abcdhospitalkpm
While increasing the ceiling, the PF authorities should also think of small and medium sector entrepreneurs. Recently, the ceiling was raised from Rs. 6500 to Rs. 15000. Since the employer contribution is 13.36%, the PF authorities can increase the wage ceiling after five years or reduce the employer contribution to 4.75%, as in the ESIC scheme. The SMEs will suffer if the ceiling is revised at present after a recent revision.

This revision can be effected for organizations employing above 150 employees or those with a turnover of 50 crores and above.
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