The Employees' Provident Fund Organisation (EPFO) in a meeting held on Wednesday took some major decisions related to employees' provident fund which are likely to help crores of employees amid coronavirus pandemic. The retirement fund body has enhanced the maximum assurance benefit under the Employees' Deposit Linked Insurance (EDLI) scheme to Rs 7 lakh from the existing cover of Rs 6 lakh. It has also announced to pay out the 8.5 per cent interest to the EPF subscribers for 2019-20 in two instalments.
In March this year, EPFO's apex decision making body Central Board of Trustees headed by Labour Minister Santosh Gangwar had approved 8.5 per cent interest rate on EPF for last fiscal. In view of exceptional circumstances arising out of COVID-19, the Central Board reviewed the agenda regarding interest rate and it recommended the same rate of 8.50 per cent to the central government employees, the Ministry Of Labour and Employment said in a statement.
The EPF rate of 8.50 per cent comprise of 8.15 per cent from debt income and balance 0.35 per cent (capital gain) from the sale of ETFs, subject to their redemption by December 31, 2020. It means EPFO will provide 8.15 per cent interest on EPF right away and the remaining 0.35 per cent rate would be credited into the subscribers' account by the end of this year, after proposed liquidation of ETFs.
The board has also recommended to account such capital gains in the income of the financial year 2019-20 as being an exceptional case.
In the meeting, the CBT also decided to hike the maximum sum assured payable under Employees' Deposit Linked Insurance Scheme 1976 to Rs 7 lakh from existing Rs 6 lakh.
"Central Board of Trustees, Employees' Provident Fund (EPF) accorded approval for amendment of paragraph 22(3) of Employees' Deposit Linked Insurance Scheme, 1976 to enhance the maximum assurance benefit to Rs 7 lakhs from the present maximum assurance benefit of Rs 6 lakhs," the ministry said.
The hike in assurance benefit will provide additional financial support to families and dependents of members of the scheme in case of their unfortunate death while in service. Under EDLI scheme, the family members of deceased employee will get minimum assurance benefit of Rs 2.5 lakh even if the member was employed in multiple establishments during the 12 months preceding the month in which he/she died. This benefit was previously not available if the member worked in more than one organisation during a continuous period of 12 months preceding his death.
During the meeting, Gangwar also launched virtual hearing facility in quasi-judicial cases under EPF and MP Act, 1952 through video conferencing. It is a major development towards the objective of faceless quasi-judicial proceedings in the EPFO. The system entails savings on time, travel and expenditure for parties, ensures compliance to social distancing norms during the pandemic, and fast tracks assessment of workers' EPF dues to generate better confidence in the quasi-judicial mechanism.
By Chitranjan Kumar