Saturday, February 8, 2025

Budget 2021: Labour Ministry recommends reducing PF Contribution

Budget 2021: Labour Ministry recommends reducing PF Contribution

The Ministry of Labour and Employment has suggested bringing down the rate of contribution by companies towards the pension and provident fund scheme administered by the EPFO in the upcoming union budget 2021.

It may increase the take-home salary of the employees but may cause loss to the pensioners. The Labour Ministry has suggested reducing both employee and employer contribution from 12% to 10%.

The Ministry has also suggested that making the pension for EPF members practical, pension to be made proportional to PF contributions, saying that the pension should be received according to the contribution. If both the suggestions are accepted, in that case, take-home salary will increase, but the pension of EPFO pensioners will decrease.

According to media reports, EPFO has more 23 lakh pensioners, who get a pension of Rs 1,000 every month. While their contribution to the PF is even less than one-fourth of it. The officials said if it continues to happen, it will be difficult to manage in future.

This is why ‘Defined contributions’ should be adopted to make it more relevant. In August 2019, EPFO’s Central Board of Trustees (CBT) has demanded to increase the minimum pension to Rs 2,000 to RS 3,000 as per pension scheme, however, it was not implemented. As per sources, the government will have to bear an extra expenditure of Rs 4500 crore upon implementing a minimum pension of RS 2,000 and if it is increased to Rs 3,000, it will cost the exchequer massive Rs 14,595 crore. 

As per officials, a big portion of EPFO amount invested in the share market also gave negative returns due to Covid 19 pandemic. Of the Rs 13.7 crore EPFO corpus, only five per cent or Rs 4600 crore was invested in the share market, said officals.

Editorial

Deloitte, PWC, EY, KPMG to Hire 1 Lakh People in India in FY25

According to estimates from top company officials and industry...

Higher EPS Pension Application Stuck: A Step-by-Step Guide to Fix

Nearly 97,640 Provident Fund (PF) members and pensioners under...

Deloitte, PwC, EY, KPMG Outpace Global Growth for India Divisions

The Indian divisions of Deloitte, PwC, EY, and KPMG...

EPS-95 Higher Pension Update: Less Than 1% Cases Settled So Far

Supreme Court Ruling and EPFO’s Higher Pension Rollout The Employees’...

Strong Job Growth and Salary Increases Expected in IT Sector

India's IT sector is on track for significant growth,...

Must Read

Policybazaar employees win houses, cars as new R&R initiative

Policybazaar last week concluded Season 3 of Jeeto Apna...

Importance of Psychological Safety in Creating Performance-driven Culture

Psychological safety has become a buzzword in recent times,...

India Inc Backs PM Internship Scheme with Over 80% Support

A recent report has revealed that over 80% of...

5G to Create New Jobs Across Industry Verticals in 2023

It is expected that 5G will be creating new...

A Differentiating Measure for Appraisals 2021 and Beyond

A Differentiating Measure for Appraisals 2021 and Beyond 2020 was...

Accenture to give one-week base pay as a one-time bonus

Accenture to give one-week base pay as a one-time...

Wipro to Transform Nokia’s Digital Workplace Services

Wipro Limited, a leading technology services and consulting company,...

Related Articles

SightsIn Plus
SightsIn Plushttps://sightsinplus.com/
SightsIn Plus is an India’s leading high-quality people-focused monthly HR Magazine and provides up-to-date HR News, Leadership Announcements, Best HR Practices and Insights by Global CHROs, CEOs, HR Advisors, Business Managers and HR Heads on topics of interest to HR professionals. To subscribe SightsIn Plus, HR Magazine please visit- https://sightsinplus.com/subscribe/