Expats' PF sop won't come into effect yet

NEW DELHI: If expats from France, Belgium and Germany thought they could escape from contributing 12% of their basic salaries to the Employees Provident Fund Organisation (EPFO), here���s a reality check.

India has signed bilateral agreements with these countries, providing for an exemption from such a contribution. However, the agreements are yet to come into effect, as they are awaiting ratification by their respective parliaments. In some cases, the ratification could take up to two years, said the officials in EPFO.

This means, expats from these countries will have to continue making provident fund deposits to EPFO, just like expat from any other non-signatory country.

The delay in ratification of these agreements and subsequently, their becoming effective also means that domestic employers will have to bear the additional expense of the contribution. They will have to match the amount contributed by expats towards the pension and provident fund schemes of the organisation. EPFO began demanding contributions for foreign workers employed in India from November 1, 2008.

A government official said that Belgium was expected to ratify the agreement by April this year. The agreement was signed in 2007.

The agreements with France and Germany may take two years before they are ratified by parliaments in these countries.

���The agreement with Belgium, which has been pending since 2007, should get going by April 2009, the official said. He added that these agreements are awaiting parliamentary ratification in the respective countries, and there was no delay from the Indian side.

He pointed that modalities are to be worked out between EPFO and social security organisations in these countries which is taking time. India has a short-term agreement with Germany that gives exemption to detached workers for up to 60 months.

India is negotiating social security agreements with 11 other countries, which are in different stages and can take around five to six years to be in place, according to the officials. Once such an agreement is concluded between two countries, workers from each country, need to pay to the social security system of one country only.