Centre Yet to Clear EPFO Dues Worth Rs 9,115 Crore, Says Report

The statutory contribution of the Centre due to the Employees’ Provident Fund Organisation (EPFO) has surged to Rs 9,115 crore. This amount is only till March this year and since then the dues have risen further more as the Centre has been facing financial pressure, reported Livemint.

Government’s contribution of Rs 8,063.66 crore to employees pension scheme (EPS) and arrears towards a minimum pension benefit for low-wage organised sector workers are included in the pending amount.

The issue was discussed in August this year and then in the following month among top officials of the retirement fund manager who had termed the situation as “worrying”, Livemint qouted an official as saying. The size of the accumulated dues has prompted EPFO to go slow on a decision to raise pension for its members, the report further added.

As per the existing EPS, the subscribers who have monthly salary of less than Rs 15,000 are receiving an additional 1.16% of the pension contribution from the Centre. The EPF Act mandates that the employer should contribute 12% of the basic pay to the EPF contribution as the employee does. So, 8.33% of employer’s contribution goes to EPS and rest goes to the EPF corpus.

According to the official who was quoted in the report, the union government has not given its yearly contribution since 2014-15. “Instead, it is paying a portion of arrears every year. If we take case of 2018-19, centre’s share to EPS contribution was Rs 5,483 crore. But, they had paid only Rs 3,900 crore.,” he said.

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The Livemint report also reveals that in 2005-06 and in 2012-13 as well, the then central government contributed only a part of its dues.

The dues to EPFO which was Rs 2,882.88 crore as of March 31, 2014, has tripled now. Successive governments have failed to address the problem, said one of the officials.

However, the Centre is keen on amending the existing EPF and EPS with major changes. The draft bill amending the Employees’ Provident Funds and Miscellaneous Provisions (EPF and MP) Act, 1952, has already been prepared. As per the draft bill, there is an option for EPS members to switch their money from EPS to National Pension System (NPS).

One another proposal which replaces the definition of ‘wage’ in the EPF Act has also surfaced. The new definition as mentioned in the Code of Wages, 2019, is likely to impact the EPF contribution of those employees whose basic salary is less than Rs 15,000.

The draft bill amending the Employees’ Provident Funds and Miscellaneous Provisions (EPF and MP) Act, 1952, which was published on August 23, on the website of Ministry of Labour and Employment, has received strong criticisms from 10 central trade unions including Centre of Indian Trade Unions (CITU), Indian National Trade Union Congress (INTUC) and All Indian Trade Union Congress (AITUC) among others.

The trade unions have observed that the government’s move to modify or reduce the EPF contribution for employees and employers would defeat the purpose of social security scheme run by EPFO.

“In Section 6, proviso Para 2, which is empowering Central Government to modify, as and when it deems fit, the rates of contribution from employers as well as employees from 12% to 10% is a blatant attempt to dismantle our well tested social security system- that is EPF,” said the unions in a letter to the labour ministry.

The unions also said that the proviso para 3 under the Section 6, with all its audacity, is trying to hit the final nail in the coffin of the entire EPF system as it empowers the government to announce any rate of contribution, for any class of employee for any period of time.

According to the central trade unions, the proposed new sections are aimed at helping and/or indulging the employers to violate the law and evade the penalty. In this context, the unions have demanded that the proposed amendments should be deleted.

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