The Hindu Business Line : EPF reforms

This refers to the editorial "Fund of Problems" (Business Line, March 13). Those who demand market-linked interest on PF have not understood the compulsions of an administered interest regime imposed by forced investment of PF funds in the Government's Special Deposit Scheme.

However, though it is obviously difficult for PF subscribers to shift to a regime of market-linked interest, a beginning has to be made. The Employees' Provident Fund Organisation, in consultation with the Finance Ministry, can decide in favour of market-linked interest rates after coming to a clear understanding with the representatives of the labour unions that their present demand for higher interest rate can be approved only if they accept the policy of market-linked interest for the future too.

For this, the Government has to disengage from the asset management function sooner than later.

A few more reforms are also required in the EPF sector. First, for all new subscribers the PF contribution can be made voluntary, especially for those drawing a monthly salary of Rs 25,000 or more.

Giving such employees the option of choosing an insurance-linked pension plan is an ideal social security measure.

Second, the Employees' Pension Scheme, 1995, under the EPF Act must be made voluntary because the Scheme as it exists now is inadequate.

Third, nationwide computerisation of EPF subscribers' accounts is a must. There is also a need to have a fresh look at the tax benefits on the employer's PF contribution.

Narendra M. Apte

e-mail

Letters to the editor and contributions can be sent by e-mail to: bleditor@thehindu.co.in

More Stories on : Letters | Social Security

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
A policy undermined

Getting away from decisive inaction

Rents in the service tax net

Discrimination in levy of surcharge

Added DDT burden

Billionaires outside the tax loop

Importance of awareness

Needed, accountability for adventurous tax demands

Relief from concealment penalty

A virtual blackhole

EPF reforms