An important meeting of the Central Board of Trustees is scheduled to take place on Thursday (4 March 2021). There may be a big announcement for the jobber in this. According to the information received from the sources, the basic salary currently sealing for PF contribution can be increased. Right now the ceiling is 15000 rupees. In simple words, if a person’s basic salary is Rs 30,000, then 12% of his contribution on that salary is deposited in the Provident Fund. This same share is also with the company’s account. However, the company’s stock has two parts. First- EPF and second- Pension (EPS). 12 percent of the company’s shares will also be deposited on basic salary of Rs 30,000.
However, the basic salary ceiling in pension fund is 15000 rupees. Due to this ceiling, 8.33 percent of the basic salary (15000) is deposited only Rs 1250. If the ceiling increases, then this share will be fixed at the limit of 25000 rupees. Meaning 2083 rupees will be able to be deposited in the pension fund. Let’s know all the things related to it…
6.5 crore employees will directly benefit
According to AK Shukla, retired assistant commissioner of the Employees Provident Fund Organization, if this decision is made, then 6.5 crore EPFO subscribers will benefit from it.
First, more people will come under its purview and secondly the company’s share will increase, then the pension fund will also increase. However, it may take time to implement this decision.
There is a discussion in different media reports that the EPFO has invested in different sources, how much return is being received and how much impact Kovid is having, it has to be reviewed before the meeting.
Therefore, it is not possible to decide on the interest rates in the meeting of March 4. Only after the review can be decided how much interest should be paid for the current financial year.
Also, how much surplus amount does the EPFO have and what kind of impact has it had on it can also be discussed.
What will happen if the ceiling is increased?
E Raghunathan of a trustee of EPFO told Money9 that the ceiling of the existing basic salary is 15 thousand rupees, it is proposed to increase it to 25 thousand rupees.
It can be kept in a meeting. Discussion on the proposal is included in the agenda of the meeting of the Central Board of Trustees. However, the agenda has not been made public yet.
Apart from increasing pension funds, the other advantage is that for those who have salary above basic salary ceiling, PF’s contribution is optional. In such a situation, now more people will come in this circle.
Why is this happening
Members of the Central Board of Trustees are in favor of increasing the salary ceiling of PF. Two kinds of arguments are being given behind this.
First, the universal minimum wage formula is being implemented across the country, in which salary can be fixed near 18 thousand rupees.
There is a need to increase the existing salary ceiling in ACE. Through this, more and more people will be helped in getting EPFO. Social Security will increase.