EPFO for hiking minimum administrative charges by employers

NEW DELHI: Retirement fund body EPFO has proposed to increase the minimum administrative charges for managing EPF and EDLI schemes to Rs 500 and Rs 200 per month from existing rate of Rs 5 and Rs 2, respectively.

The Employees' Provident Fund Organisation (EPFO) has listed the proposal on the agenda of the meeting of its apex decision making body Central Board of Trustees (CBT) headed by Labour Minister, scheduled on January 13.

"...CBT may consider and recommend to the Government of India for an enhancement in the minimum charges payable towards administrative accounts in the EPF Scheme, 1952 and Employees' Deposit Linked Insurance Scheme, 1976 from the existing Rs 5 and Rs 2 per month to Rs 500 and Rs 200 per month, respectively," it stated in its proposal.

However, the EPFO has proposed an increase of service charges to Rs 75 and Rs 25 per month respectively for managing EPF and EDLI schemes for non-functional establishments having no contributory members.

Making a case for hiking the charges, the body said, "Since 1978, on account of expanding economy, the real value of the rupees has come down substantially. In terms of Consumer Price Index (CPI) alone, the index stands at 5364 as on July, 2013 (Base:1960=100) as against 335 December, 1978. There is a strong argument to increase the minimum charges on the administrative accounts EPF and EDLI scheme."

According to EPFO, the schemes restricts its membership only for employees drawing pay(basic wages + dearness allowance + retaining allowance) up to Rs 6,500 per month on the day of becoming eligible for membership and excludes those with higher pay brackets.

The wage ceiling of Rs 6,500 was fixed in June 2001 which is lower than minimum wages prescribed in all the states. Thus employees of all new firms are virtually left out of the mandatory social security net provided by EPFO. Thus a large number of firms paying meagre Rs 7 and Rs 2 per month for the two schemes every month.

The employers are required to pay Rs 1.1 per cent of the basic wages as administrative charges for EPF Scheme and 0.01 per cent of basic wages for EDLI Scheme for each worker. But workers getting more than Rs 6,500 as basic wages are not covered under the scheme.