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New EPFO scheme may reduce take home pay for 5 crore subscribers

Decks have been cleared for clubbing of allowances with basic pay for PF deductions under the EPFO scheme, a move that will increase savings but reduce take-home pay of over 5 crore subscribers.

A review committee, constituted to look into the nitty- gritty of clubbing of allowances with basic pay for PF deductions, has supported the idea for enhancing the social security benefit under the EPF scheme run by the Employees' Provident Fund Organisation (EPFO).

'The committee's suggestion would be vetted by the Labour Ministry and would be put before the EPFO's apex decision making body the Central Board of Trustees (CBT) for taking final call on it,' a trustee and Secretary Bharatiya Mazdoor Sangh B N Rai said. 'On the issue of clubbing of wages, even the employers' representatives supported the view that all such allowances which are regularly and uniformly paid to workers should form part of basic pay for PF deductions,' said Rai, who was the member of the review panel.

The suggestions of the committee have been already sent to Labour Ministry for scrutiny, EPFO officials said.

On 30 November, the outgoing Central Provident Fund Commissioner R C Mishra brought out a notification to club all allowances which are regular in nature, with basic pay.

   
PENSION FUND BODY TIGHTENS NORMS FOR PVT SECTOR NPS


Tightening its norms for the private sector New Pension System (NPS), the Pension Fund Regulatory and Development Authority (PFRDA) has disallowed fresh investments in equity mutual funds and ETFs from the corpus.

Besides, the pension regulator has asked these fund managers to restrict their single industry exposure to 15 per cent of NPS investments under all schemes, among others.

PFRDA has issued these clarifications in response to queries received from pension fund managers seeking clarity on certain clauses of the investment management agreement for private sector.

'In terms of revised investment guidelines for private sector NPS, fresh investments in equity related Mutual Funds and Exchange Traded Funds (ETF) are disallowed,' PFRDA said in a circular dated 17 April.
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