According to an ET report, after disinvestment, and acquisitions by Tata Group thousands of Air India and Indian Airlines employees will come under the ambit of EPFO (Employees Provident Fund Organization) from January 1, 2022.
Air India is supposed to shift all of its employees’ from the provident fund trust to the Employees’ Provident Fund Office (EPFO) before the ownership of the Airline is transferred.
According to Union aviation minister Jyotiraditya M Scindia, Air India will be transferred to its new owner, the Tata Group, by the third week of January 2022.
January 23, 2022 is the ‘long stop date‘ by which Tatas have to take over the airlines.
Air India has two Provident Fund Trusts Air India Employees Provident Fund (AIEPF) trust and Indian Airlines Employees Provident Fund (IAEPF) trust that are governed by the Provident Fund Trust Act, 1925.
The two trusts’ investments together amounted to Rs 4,500 crore as of August 31, 2021, according to the tender document, seeking RFPs for the appointment of the transaction advisors.
Out of AIEPF trust’s corpus, 68.75 per cent was invested in central and state government bonds, 22.40 per cent in corporate bonds, and 8.85 per cent in SDS (Special Deposit Scheme).
In the case of IAEPF trust, 45.93 per cent of the investments were in central and state government bonds, 39.28 per cent in corporate bonds, 13.35 per cent in SDS and 1.44 per cent in equity.
The shift to EPFO is expected to fetch better returns on the provident fund kitty of Air India employees than what they were getting under the trust which was managed by the national carrier that was in huge loss.
The losses of Air India PF trusts were more than Rs. 100 crore and trusts were paying the lower interest rate that would impact employees’ retirement benefits.
The handover process is currently in an advanced stage and in this eventuality, Air India will automatically come within the purview of the Employees’ Provident Fund & Miscellaneous Provision Act.
