All those EPFO members who are opting to contribute on their actual basic wage which is higher than the threshold of Rs 15,000 per month for getting a higher pension will not have to contribute the additional 1.16 per cent towards EPS. This additional contribution will be managed from employers’ contributions to social security schemes run by the EPFO.
What Does Govt Order Say?
According to a statement issued by the labour ministry on May 3, “It has been decided to draw 1.16 per cent additional contribution from within the overall 12 per cent of the contribution of the employers into the provident fund.”
It said this provision is retrospective in nature and in line with the directions given by the Supreme Court.
The spirit of the EPF & MP Act, as well as the Code (Code on Social Security), do not envisage contributions from the employees into the pension fund, according to the statement.
What Is The Current Provision?
Currently, the government takes care of 1.16 per cent of basic wages of up to Rs 15,000 (threshold basic wage) as a subsidy for contributions towards the Employees’ Pension Scheme (EPS).
The Employers’ 12% Contribution
The employers contribute 12 per cent of basic wages towards social security schemes run by the EPFO. As much as 8.33 per cent out of the 12 per cent contributed by the employers goes into the EPS and the remaining 3.67 per cent is credited into the employees’ provident fund.
Now, all those EPFO members who are opting to contribute on their actual basic wage which is higher than the threshold of Rs 15,000 per month for getting a higher pension, will not have to contribute this additional 1.16 per cent towards EPS.
Accordingly, the Ministry of Labour & Employment has issued two notifications on May 3, 2023, implementing the above (decision), it said.
The ministry said that with the issue of the notifications, all the directions of the Supreme Court contained in the judgment on November 4, 2022, have been complied with.
The Supreme Court had held the requirement of the members to contribute at the rate of 1.16 per cent of their salary to the extent such salary exceeds Rs 15000 per month as an additional contribution under the amended scheme to be ultra vires of the provisions of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (EPF & MP Act).
The apex court had directed the authorities to make necessary adjustments to the Scheme within a period of six months.
Read all the Latest Business News, Tax News and Stock Market Updates here
Comments
0 comment