Economy

EPFO pension should move to defined contribution: Centre

AM Jigeesh New Delhi | Updated on January 07, 2021

Says it is awaiting SC’s order and has not decided on minimum pension

At its second meeting with the officials of Union Labour Ministry and the Employees Provident Fund Organisation on the ‘Functioning of the EPFO with special reference to EPF Pension Scheme’, the Labour Standing Committee of Parliament reiterated its view that the Centre should make its stand clear on the issue of minimum pension for EPFO subscribers.

The officials told the panel that the Centre is waiting for the Supreme Court’s order on it and no decision is yet taken on the question of minimum pension.

The Centre said that there are around 2.3 million pensioners and the contribution is hardly ₹50 to ₹60 per month and the Centre expects that it should be ₹1,000 per month. Otherwise, it will be a burden on the Centre. The government officials suggested in the meeting that the scheme may have to move from defined benefit to defined contribution.

“The Centre wants us to propose that the EPFO pension should move from defined benefit to defined contribution. But they have not answered many of our questions. We will take a final call after looking at their responses,” a member in the panel said.

The panel was also told that Finance Ministry is considering the matter of minimum pension. “There are demands that the minimum pension should be at least ₹7,000.

Minimum pension

But the Centre’s stand is that this cannot be solved unless we move to defined contribution and it needs a policy decision. The officials said the contribution should be for at least ten years. They suggested that the provision of allowing withdrawal of EPFO after ten years of service should be stopped so that more money can go to the pension fund,” another member said. The members also said in the meeting that universality of the PF is still a challenge and suggested that members from unorganised sector should also be brought under the EPFO. The meeting discussed the investments made by EPFO in stock markets.

The panel had asked the EPFO to provide details of their investment and parameters for investment. “The total investment under companies under the default category is ₹4,243.33 crore and the actual default already occurred is to the tune of ₹1,111 crore both in public and private investment. When asked about the reasons for such an investment, they did not give exact answer. We have demanded action on investment into such companies,” a senior member said.

Published on January 07, 2021

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