Centre forms four panels to look into EPFO functioning

Context:

The Union Government has formed four ad-hoc board-level committees to look into the functioning of different aspects of the Employees’ Provident Fund Organisation (EPFO), including IT, communications and pension.

Relevance:

GS-III: Indian Economy (Economic development and growth, Government Policies and Initiatives, Issues with the design and implementation of policies)

Dimensions of the Article:

1. What is Employee Provident Fund (EPF)?
2. Employees Provident Fund Organisation (EPFO)
3. About the panels to look into EPFO functioning

What is Employee Provident Fund (EPF)?

• Employee Provident Fund (EPF) is a retirement savings scheme that the government of India has mandated for all salaried employees.
• In simple words, it is a savings platform provided by the government to help the employees build a corpus for post-retirement life.
• EPF is the main scheme under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
• The funds deducted from the salary as PF goes to the PF account, which is maintained by the Employee Provident Fund Organization (EPFO).
• The Employee Provident Fund is open for employees of both the Public and Private Sectors.
• All organizations in India that have more than 20 employees, as per law, is mandated to register with EPFO.
• Both employer and employee contribute 12% of an employee’s monthly salary (basic wages plus dearness allowance) to the Employees’ Provident Fund (EPF) scheme.
• EPF scheme is mandatory for employees who draw a basic wage of Rs. 15,000 per month.
• This savings scheme offers tax exemption under Section 80C of the Income Tax Act.

Employees Provident Fund Organisation (EPFO)

• EPFO is a Statutory Body, formed by the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
• EPFO is under Union Ministry of Labour & Employment.
• The EPFO has the dual role of being the enforcement agency to oversee the implementation of the EPF & MP Act and as a service provider for the covered beneficiaries throughout the country.
• The EPF interest rate is declared every year by the EPFO.
• EPFO assists the Central Board in administering a compulsory contributory Provident Fund Scheme, a Pension Scheme and an Insurance Scheme for the workforce engaged in the organized sector in India.
• It is also the nodal agency for implementing Bilateral Social Security Agreements with other countries on a reciprocal basis.
• The schemes cover Indian workers as well as International workers (for countries with which bilateral agreements have been signed.
• The EPFO’s apex decision making body is the Central Boad of Trustees (CBT).

About the panels to look into EPFO functioning

• Union Labour and Employment Minister who chairs the Central Board of Trustees of the EPFO approved the formation of four ad-hoc board-level committees to look into the functioning of different aspects of EPFO.
• Two of the committees — on ‘pension reforms’ and ‘IT and Communications’ will be steered by Labour Secretary.
• The eight-member panel on pension reforms had been told to submit a report advising ‘on matters relating to pension reforms for universalisation of social security’. An EPFO official pointed out that the mandate of this particular panel is ‘unusual and unclear’ as a board-level committee already exists for reviewing and improving the Employees’ Pension Scheme (EPS) of 1995.
• The ad-hoc committee on IT and Communications has 10 members, including three representatives each from employers and employee unions. The panel has been asked to suggest ‘IT measures to improve service delivery’ for EPFO members, build capacity of EPFO’s IT personnel and ‘effective media and communication with stakeholders’.
• One of them pertains to EPFO’s internal human resources and establishment matters while the other is tasked with finding ways to enhance EPFO’s coverage and reducing related litigation.

-Source: The Hindu