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EPFO corpus to grow by Rs 15,000 crore as EPF Act gets implemented in J&K

The Employees Provident Fund and Miscellaneous Provisions Act, 1952, will come into effect in the recently bifurcated Union Territories of Jammu and Kashmir, and Ladakh from October 31. The process is expected to add around 3 lakh subscribers to the EPFO, as it takes over the state PF corpus.

twitter-logo BusinessToday.In        Last Updated: September 12, 2019  | 17:48 IST
EPFO corpus to grow by Rs 15,000 crore as EPF Act gets implemented in J&K
The CBT's decision will bring over 12,000 firms and establishments in J&K and Ladakh under the EPFO

A key decision taken at the August meeting of the Central Board of Trustees of the Employees' Provident Fund Organisation (EPFO) was to bring all the organised sector employees and pensioners in the recently bifurcated Union Territories of Jammu and Kashmir, and Ladakh within the ambit of the body. This development followed the passage of the Jammu and Kashmir Reorganisation Act, 2019, and the abrogation of Article 370.

With the central retirement fund body now taking over the corpus hitherto managed by the J&K Employees' Provident Fund Organisation, EPFO's kitty is set increase by over Rs 15,000 crore. Government officials told Mint that the CBT's decision will bring in more than 12,000 firms and establishments under the EPFO. The process is expected to add around 3 lakh subscribers under its purview.

"The EPFO corpus will jump as fresh deposits from few lakh new subscribers will get added to the retirement fund. Since EPFO is a social security body more than the jump in corpus, the move will bring benefit to more people by providing PF, pension and insurance facilities to workers of both the UTs," said a source.

J&K so far was governed by its own EPF scheme of 1961 and Employees Deposit Linked Insurance (EDLI) linked scheme of 2000. Given its special status under Article 370 of the Constitution, the central EPFO Act till recently did not apply to the state. But on August 5, President Ram Nath Kovind issued a new order - the Constitution (Application to Jammu and Kashmir) Order, 2019 - making all provisions of the Indian constitution applicable to J&K, besides making all clauses of Article 370 inoperative.

The application of the central EPF Act will reportedly come into effect from October 31, when the two UTs will come into existence. But before that the central body will have to complete sizeable spadework, including setting up regional offices and actuarial analysis of the existing funds to expand the coverage to J&K and Ladakh. "It has been approved to do all necessary ground work to extend the EPF Act to both the union territories," CBT member Michael Dias told the daily.

"With promulgation of the EPF Act 1952 in the UTs, from the appointed day, it is imperative for the EPFO to put in place mechanisms to facilitate compliance and service delivery such as registration by establishments, remittances of contributions , banking arrangements, enabling IT infrastructure, actuarial analysis of the existing fund and setting up of necessary infrastructure and offices," read an EPFO document.

Meanwhile, the labour ministry is likely to notify the 8.65 per cent rate of interest on EPF soon. The CBT in February had decided to hike the rate for 2018-19 by 10 bps over FY18, but the amount can only be credited into the accounts of the over 6 crore EPFO subscribers post a notification by the ministry.

With PTI inputs

Also read: EPFO acts on PM Modi's call to respect wealth creators, to halt wage structure inquiries

Also read: EPFO to launch e-inspection system to simplify process: CPFC

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