Logout
Welcome
Edit News Article
Title
*
Select Subject
Working Conditions
Wages
Construction workers
Bonded labourers
Welfare schemes
Social security
Unorganised sector workers
Minority communities
Id cards for migrant workers
Trafficking
Slum dwellers
Seasonal workers
Contract system of labour
Employment
Child labour
Children of migrant workers
Trade union
Migrants Crisis
Demonetisation
None
Description
The government will now pay the Employees’ Pension Scheme (EPS) contribution of 8.33% for all new employees enrolling in the Employees’ Provident Fund Organisation (EPFO) for the first three years of their employment starting from FY17. This is has been done to incentivize employers to recruit unemployed people and to bring informal employees into the books. The EPF is a voluntary scheme for salaried individuals earning more than Rs.15,000 per month. Every month, 12% of your salary goes into the EPF account and the employer matches the contribution. Of the employer’s contribution, 8.33% goes into the EPS. “The employer also contributes 12% to the EPF. Of this 8.33% goes to the employees’ pension scheme and 3.67% goes to the EPF. So now the liability of the employer is reduced by 8.33% as that will be funded by the government,” added Sonu Iyer, tax partner, Ernst and Young. EPS offers pension from the age of 58 years and after 10 years of continuous service. EPS is a defined pension product. “For the existing workforce, the monthly pension is calculated on a pensionable salary up to Rs.15,000 multiplied by the number of years in service divided by 70,” said Amit Gopal, senior vice-president, India Life Capital Pvt. Ltd, an investment and legal consulting company that specializes in retirement benefits. For the salaried, the EPF is an important product in the debt space to invest in for retirement. And for FY16, the rate of interest has been decided at 8.8%. This is important given that the overall environment is of falling interest rates. This is also a good scheme for retirement, and the government wants to bring semi-skilled and unskilled workers into the fold of the formal sector. For this purpose, it will apply to those who earn a salary up to Rs.15,000 per month. “Since the employer has to contribute less, it may decide to pay the employee more. But it remains to be seen if that would encourage people to join the formal sector as our experience suggests that there are more incentives in terms of cash compensation in the informal sector,” said Gopal. The government has also made a budgetary allocation of Rs.1,000 crore for this scheme.
Keywords
Employees Pension Scheme, Employees Provident Fund, salary, employers, vice-president, India Life Capital, debt, formal sector
Upload Image
(only .gif or .jpeg files or .x-png files. Max upload size is 20MB)
Source
Display in both Policy and News
No
Yes
Enter Video url/Embed Code :
Url
Embedded Code
External Link URL
Status
Active
Inactive
Show On Home Page
Yes
No