EPFO mulls further reduction in admin fee charged from firms

In a move that could substantially reduce the financial burden of around 800,000 employers, the Employees’ Provident Fund Organisation ( EPFO) is considering afurther cut in the administrative fee it charges companies. The industry has called for a reduction in the administrative fees as this is a part of the employers’ contribution towards the EPFO.

The EPFO is planning to reduce the administrative fee from 0.85 per cent to 0.65 per cent of the monthly basic salary. The Union labour ministry had already reduced the administrative charges from 1.10 per cent to 0.85 per cent with effect from January this year.

“As the services of EPFO improve with changing technology, acase is made out to reduce the administrative fee. We are in discussion to reduce it to 0.65 per cent of the monthly salary,” said Central Provident Fund Commissioner K K Jalan. However, the move will need the approval of EPFO’s apex decision- making body, the Central Board of Trustees ( CBT). The CBT is scheduled to meet on September 16 in Hyderabad. However, this proposal is not a part of the agenda as yet.

Industry representatives had requested the Union labour ministry recently to reduce the administrative charges. “ While reduction in the administrative charges will not bring any adverse impact to the social security benefits of employees, it will be a huge relief to the employers, which is very important in the present competitive environment,” said aletter by G P Srivastava, chief advisor, Associated Chambers of Commerce and Industry of India. The industry has, however, demanded a reduction to 0.5 per cent of the basic salary from the present 0.85 per cent.

According to sources, EPFO employees are usually apprehensive of the move as the fund collected through this fee is used to pay their salary. Apart from this, the fund is also utilised for expenditure on maintenance of its infrastructure, bank commission and also to pay the portfolio managers EPFO hires to manage the fund. In 2014- 15, the EPFO had earned around Rs.5,000 crore through administrative charges.

Allaying these concerns, an EPFO official said: “ The reduction will have no impact on the salaries of the employees and on other expenses at all. The collection of administrative fees is in surplus.” According to EPFO’s balance sheet, it collected Rs.5,015 crore through administrative charges from employers, but the actual expenditure stood at Rs.1,766 crore thereby leaving asurplus of Rs.3,249 crore.

Despite a cut in the administrative fees, the EPFO was able to collect more funds than in 2013- 14, when its contribution stood at Rs.4,176 crore.

EPFO’s trustees will consider a proposal to allow its subscribers to pledge their future PF contribution to buy low- cost houses, in ameeting scheduled on September 16.

The EPFO’s apex decision- making body, the Central Board of Trustees will consider the report of the expert committee on housing facility for the subscribers, according to the agenda of the meeting. The committee has unanimously recommended a scheme to facilitate subscribers to buy houses where they will get an advance from their PF accumulation and will be allowed to pledge their future PF contribution as EMI payment.

Under the proposed scheme, there will be tripartite agreement with member, bank/ housing agency and EPFO for pledging future PF contributions as EMI payment.

Employees of temples, mosques come under PF ambit

In the eyes of the EPFO, the staff of temples, mosques, churches, gurdwaras and other religious institutions are equal to the workers of any other company.

According to a recent notification by EPFO, all charitable and religious trusts should “extend social security benefits” to “ all eligible employees of such establishments” with effect from April 1 this year.

This means, religious institutions and charitable trusts employing 20 workers or more will have to deposit employees’ provident fund with the EPFO.

The UPA government had exempted trusts receiving grants- in- aid from the Central or state governments from the purview of the EPF Act. “ The Centre has decided to cover all such establishment under the EPF Act as it feels all employees should be covered by the social security scheme irrespective of the nature of the establishment,” Central Provident Fund Commissioner K K Jalan told.

According to existing rules, any establishment hiring 20 or more workers should contribute apart of employees’ income towards EPFO. The government wants to lower the threshold to 10 workers. However, this proposal is yet to reach the Cabinet.

Business Standard, New Delhi, 9th Sept. 2015