Private players likely to help run EPFO and ESIC schemes

NEW DELHI: Labour ministry is planning to move to a public-private-partnership mode to run and administer its flagship provident fund and medical insurance schemes that it wants to make universal. The ministry reckons that private intermediaries would be needed as the schemes are scaled up to 10 times to about 50 crore workers, from its current coverage.

These schemes are at present run by the Employees Provident Fund Organisation (EPFO) and the Employee State Insurance Corporation (ESIC). A senior government official told ET that the idea is to rope in intermediate agencies, much on the lines of the Pension Fund Regulatory and Development Authority (PFRDA), which manages the National Pension Scheme. Currently, EPFO and ESIC provide provident fund and medical insurance cover to over five crore subscribers and the schemes are run by the labour minister-led central board of trustees (CBT). The EPFO and ESIC corpus is managed by portfolio managers under the supervision of CBT.

The proposed intermediate agencies will work on behalf of the state social security boards and would work in areas of fund management, point of presence, service delivery, benefit disbursement, record keeping and facilitation for enabling the PPP system in administering social security.


“This will help us expand the service delivery net to cater to the broad base of subscribers who are not just very large in numbers but are also very heterogeneous in their characteristics, including geographical spread, access to information, and ability to participate in this right-based system,” the senior government official said.

“Moreover, this provision will allow us to engage expertise for specialised yet non-core activities related to administration of provisions of social security code,” the official explained.

Trade unions are on board with the idea but are apprehensive that participation of private players may dilute the benefits to its subscribers under these schemes.