Wage ceiling may be hiked to expand EPS net

EPS
Wage ceiling may be hiked to expand EPS net

After dilly-dallying for more than a year, the labour ministry may enhance the wage ceiling from Rs 15,000 to Rs 21,000 to bring more subscribers under the pension net. This could cost the exchequer Rs 2,500 crore annually and an estimated 6 million people will become eligible for a minimum pension of Rs 1,000 a month under the government’s Employee Pension Scheme.

This is over and above the Rs 4,000 crore, the government contributes at the rate of 1.16% for over more than 4 crores EPFO subscribers and is seen as a targeted approach to appease country’s increasing workforce ahead of general elections next year. The EPFO had hiked salary threshold from Rs 6,500 to Rs 15,000 in August 2014.

This U-turn comes two months after labour minister Santosh Gangwar said there is no such plan at this point. However, the labour ministry recently asked EPFO to furnish financial implication of the proposal, a senior government official told ET on the condition of anonymity.

This has been a long pending demand of trade unions to expand the coverage of social security net by enhancing the wage limit, the official said, adding “I don’t think we will sit on it for long. It’s only a matter of time that the government makes an announcement.”

The government pays 1.16% of the wages to each subscriber earning less than Rs 15,000 a month towards EPS. Under current rules, it is mandatory for units employing 20 or more people to provide EPF benefits to workers.

Source: Economic Times

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