A higher PF pension cut has been announced by the Labour Ministry, of 1.16%, for the implementation of a new provident and pension fund scheme. It has been decided to draw 1.16% additional contribution from within 12% of the contribution of the employers into the PF.
What is news ?
The Union Labour Ministry announced and has issued two notification on the implementation of the Supreme Court verdict on higher Provident Fund(PF) pension
About the news – The notifications announced by the ministry tells that –
- It gives the Employees’ Provident Fund Organisation (EPFO) the authority to withdraw an additional 1.16% of the 12% that employers contribute to the PF.
- The relevant Social Security Code sections also permit this action.
New Functioning of the fund –
- The provision will be implemented in a retrospective manner and the employers will contribute 8.33% on entire wages and 1.16% on wages from September 1, 2014.
- Only the legal infirmity has been corrected by the government in compliance with the apex court judgment.
- Now, the same 1.16% of income that came from the employee’s PF contribution will come from the employer’s PF share.
- The government pays 1.16% of the basic wages of up to Rs.15000 as subsidy for contribution towards the Employees Pension Scheme.
- The employer’s contribute 12% basic wages towards the social security scheme run by EPFO.
Employee-Employer conflict –
- 9.49% of the employer’s share of 12% is directed to be remitted to pension funds instead of the present 8.33%.
- Only the remaining 2.51% will get credited to PF account instead of 3.67%.
- The loser is the employee here, not the employers. His PF account suffers a shortfall of 1.16%.
- The interest on PF accumulation also will reduce to that extent.