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Govt proposes to hand over EPFO corpus of Rs 10 lakh crore to a central body

Labour ministry proposes to hand over reins; dedicated funds for provident fund, pension & insurance schemes to be administered by a Central Board.

ET Bureau|
Updated: Sep 19, 2019, 09.23 AM IST
Social Security Code, 2019, also proposes that all workers, existing as well as new, be given the option to join the National Pension Scheme (NPS).
NEW DELHI: The labour ministry has proposed to hand over control of the over Rs 10 lakh crore corpus of provident fund, pension and insurance schemes under the Employees’ Provident Fund Organisation (EPFO) to a central body, which will have a central government-appointed chairman. Unlike the central board of trustees of the EPFO, the labour minister will no longer be the chairman of the board, as per the proposal.

The ministry has circulated a fresh draft of the social security code which will merge, simplify and rationalise the relevant provisions of the existing eight central labour laws and create a central board of trustees to administer these schemes. It has proposed that the government create dedicated funds for all three schemes that will be administered by this central board, thus undermining the autonomy of these institutions.

The ministry circulated the draft code on Wednesday seeking comments from stakeholders by October 25, after which tripartite consultations will be held among the central government, employers’ representatives and employees’ representatives to finalise the code.

The development came a day after labour minister Santosh Kumar Gangwar said his ministry would soon reach out to the public for opinion on the draft code. The Social Security Code, 2019, also proposes that all workers, existing as well as new, be given the option to join the National Pension Scheme (NPS).

“The central government may, by notification, constitute, with effect from such date as may be specified therein, a board of trustees for whole or part of India as specified in the notification (hereinafter in this code referred to as the central board) for the administration of the funds vested in it in such manner as may be prescribed by central government,” says the draft social security code.

Security code

The proposed central board will comprise a chairman and a vice chairman appointed by the central government, five representatives of the central government, 15 representatives of different state governments, 10 representatives of employers as well as employees of the establishments to which the scheme will apply. Further, it proposes that three schemes be framed – the Employees’ Provident Fund Scheme for establishment of PF, the Employees‘ Pension Scheme for pension benefits and the Employees‘ Deposit Linked Insurance Scheme (EDLI) for life insurance benefits.

The code proposes that the central government may, for the purpose of these schemes create the fund (for PF), the pension fund (for pension scheme) and the insurance fund (for EDLI scheme), the control of which shall vest in, and be administered by, the central board.

The proposal is likely to face stiff resistance from trade unions. Vrijesh Upadhyaya, general secretary of Bhartiya Mazdoor Sangh, had earlier told ET that the Rashtriya Swayamsevak Sangh-affiliated trade union would resist any proposal to workers to opt between EPFO and NPS since the two schemes are not on a par. “Giving workers the option to switch to NPS will not be in the interest of the workers,” he had said, adding that the union would oppose it at the tripartite meet.

Amarjeet Kaur, general secretary of All India Trade Union Congress, said the union had been opposing the government’s move to dilute the existing social security laws. “This government is not seized of the workers’ need. They want to usurp our funds by forcibly codifying all social security laws,” she said.

Out of the four labour codes proposed to amalgamate 44 labour laws, the ministry has already got the labour code on wages passed by Parliament while it has introduced the labour code on occupational safety in the Lok Sabha.

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EPFO backs plan to allow subscribers’ NPS switch

Does pension from EPFO qualify for standard deduction?

EPFO's investment in ETFs at Rs 86,966 cr till September

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