Saturday, 25 October 2014

Amendments In Statutory Benefits For Employees' And It's Impact: Provident Fund, Pension Fund, Deposit Linked Insurance

The Ministry of Labour Laws by notification dated 22nd August,2014 amended Employees Provident Fund Act,1952 effective 1st September,2014. You can read about Employees' Provident Fund in the link given below.

The highlights are as follows:-

Amendments with respect to Contributions to the Employee Provident Funds (EPF)

The wage ceiling of Rs 6500/- has been raised to Rs 15,000/- for the purpose of calculating the EPF. Thereby all the employees who fall under the bracket of Rs 6500/- to Rs 15,000/- will now be covered under the EPF.
New entrants with Basic wage exceeding Rs 15,000/- may not opt for the EPF.
EPF will continue to earn interest on the fund as prescribed by the Statutory Body every year.

Amendments with respect to Contributions to Employee Pension Scheme (EPS)

The previous wage ceiling of Rs 6500/- used for the calculation of contribution to EPS has been raised to Rs 15,000/-.Thereby the maximum limit of contribution has increased from Rs 541 to Rs 1250/- respectively.
New entrants to EPF who join after 1st September,2014 and earn more than Rs 15,000/- are excluded from contributing to the EPS, their entire contribution will go to the EPF.
The Slab for minimum pension has been raised from Rs 250/- to Rs 1,000/-.
Central Government Contribution to Pension Fund increased to maximum of Rs 174/- (1.16% of Rs 15,000/-), earlier it was calculated on the wage ceiling Rs 6500/-.
Determination of Pensionable salary from 1st September,2014 has also undergone a change. The period for calculating the average monthly pay has been increased to 60 months from 12 months. Thus pensionable salary would be calculated on pro-rata basis separately for the period till 31st August,2014 and 1st September,2014 onwards with Rs 6500/- and Rs 15,000/- respectively as the wage ceiling.

Amendments to Employee Deposit Linked Insurance Scheme (ELDIS)

In case of all ELDI claims, where the death of a EPF member occurs on or after 1st September,2014 the benefit will be calculated on the enhanced wage ceiling of Rs 15,000/- per month along with additional increase of 20% to determine the total benefit.
The maximum insurance limit for the Provident Fund members has also been increased under EDLI scheme. In case of death of a member covered by EPF, their family will be entitled to maximum sum assured of Rs 6 lacs instead of Rs 3.6 lacs provided previously (revised as on 17th Sept,'15).


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