Soon, employees will be able to contribute to their EPF - 95
Posted on: 15/Jun/2016 10:07:42 AM
The Employment Provident Fund Organisation, or EPFO, are looking at a proposal that may allow its subscribers to contribute voluntarily towards its pension scheme. The EPFO is a retirement fund body. The proposal will be in addition to the employers’ mandatory contributions.
Speaking about this, a senior official from EPFO said, We are considering a proposal to allow employees to contribute towards `EPS 95` for getting enhanced benefits after retirement. But that contribution would be paid by the employees.
Currently, employers contribute 8.33 per cent of the basic salaries of Rs. 15,000 per month towards the Employees’ Pension Scheme 1995, better known as EPS - 95. The employee must have a minimum monthly basic wage of Rs. 15,000 to be eligible for deduction of EPS contribution. Based on this, the maximum contribution in a pension account can be Rs 1,424 every month which includes government subsidy of 1.16 per cent of basic wages even if an employee is drawing more than the threshold.
If the above proposal is approved, the employees will have an option to contribute towards EPS 95 in addition to contributions made by employers. Unofficial calculations shows that, over three decades of service with average basic wages of Rs 15,000 would result in a pension of not more than Rs 7,500 per month.
Says an official, The EPFO has considered the enhanced paying capacity of a large number of subscribers. It is now working on this proposal to allow them, the subscribers, to contribute more in addition to employers` contribution for ensuring higher pension after retirement. Since the pension under the EPS 95 scheme is not inflation linked, it remains stagnant after retirement. Thus the employees should have an option to contribute more towards the pension scheme.
