For the months of May, June and July 2020, provident fund (PF) contributions by employer and employee shall stand reduced from the extant 12 per cent of basic plus dearness allowance to 10 per cent thereof. The employee is free to contribute more, if he wants but the employer shall contribute only 10 per cent for these three months, as announced by the government.

The PF is a post-retirement war chest. An employer contributes to it by way of deferred wages, so that one gets a tidy sum during the rainy days. The government announcement says that around 4.3 crore employees would benefit by way of higher take-home pay thanks to this reduction. This is a perverse world-view, worsened by by the government’s attempt to pass it off as part of the ₹20-lakh crore fiscal package. It is at best an expedient or an illusionary measure.

Except at higher echelons of employment, workers are going to acquiesce in this act of long-term self-abnegation by settling for 10 per cent contribution. What’s even more unjustified is limiting employers from contributing more than 10 per cent, even if they have the willingness and capacity to do so. Remember here that the Central and State governments are not covered by this measure. Why then, should the employees of the private sector be denied their post-retiral dues? If at all employers were to be protected, they could have been asked to contribute the additional 2 percentage points after six months when they have recovered somewhat from the debilitating influence of lockdown.

With regard to withdrawals from one’s PF balance for meeting the financial exigencies during crisis times, here too, the provisions of the scheme are so taxing that not many can avail of this option. The amount that can be withdrawn is three months’ salary or 75 per cent of the balance, whichever is less. Nothing wrong with this tightfistedness, because after all, one should not fritter away this nest egg to fulfil their immediate needs. But one can avail of this non-refundable coronavirus advance, as it were, only if they comply with the following requirements: activate their Universal Account Number (UAN); link Aadhar with the UAN; and link bank account details with the UAN.

While the idea behind UAN, launched in October 2015 by Prime Minister Narendra Modi, is laudable, its strict implementation during a crisis would result in many needy persons not being able to avail of the withdrawal option. The UAN is essentially targeted at migrant labourers who flit from one job to another, and thus come to have multiple PF accounts. As a result, they forfeited PF benefits due to ignorance and indolence.

The UAN comes to their rescue by consolidating all such piecemeal PF balances of an employee. Seeding it with Aadhaar as well as bank account are also salutary measures designed to facilitate withdrawal without much ado. But then, reading a riot act during a crisis is cruel.

The government should allow employees to withdraw from their PF accounts to meet their financial needs during these troubled times, without insisting on their UAN requriements. The government seems to believe that a crisis is the best time to bring about reforms. But poor, illiterate and itinerant employees must not be burdened with this compliance drill when they and their families are twiddling thumbs while waiting for the next meal.

The writer is a Chennai-based chartered accountant

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