No plans to re-open higher pension window: EPFO CEO Ramesh Krishnamurthi
Allaying concerns raised by the trade unions that the Social Security Code and the newly drafted schemes of the Employees Provident Fund Organisation (EPFO) and
Allaying concerns raised by the trade unions that the Social Security Code and the newly drafted schemes of the Employees Provident Fund Organisation (EPFO) and its schemes will further shrink the social security ambit, the Chief Executive Officer (CEO) of the EPFO, Ramesh Krishnamurthi, said the EPF scheme 2026 is focused on continuity. He said the core provisions of the EPS Scheme 1952, which was there for nearly seven decades, have not been touched. “The contributions remain at 12%. The wage ceiling as of now is also as per the earlier wage ceiling notified in 2014, which is ₹15,000. Earlier also this concept of voluntary PF contributions existed. Irrespective of the wage or the salary, most employers used to offer provident fund as a 12% of your wages. It’s not a new provision.
There’s nothing which has changed. It’s always existed,” Mr. Krishnamurthi said. Maintaining that PF is one of the best avenues for retirement savings, he hoped that most employers are not going to change their entire contractual terms because the new scheme has now come. “Of course, if any new employer or any new employee wants to have a different approach, the scheme does provide that flexibility,” he said when asked about the reports that employers can keep their share of contributions to the PF at the bare minimum. He said the Social Security Code introduced a very harmonised definition of wage. “It has provided the expansion of social security coverage to unorganised workers and to gig and platform workers. EPFO is changing,” he said. He added that the Code on Social Security gives the government the flexibility to change the wage ceiling.
“As far as minimum pension and wage ceiling are concerned, these are policy decisions determined by the government based on budgetary support. So this is for the government to take a hold,” he added. When asked if the EPFO will open the window for higher pension again, he declined and said the employee pension scheme is a pooled fund, which is formed by the contribution of each one of the members of the pension scheme. “We have processed almost all applications, nearly 4.4 lakh demand letters were issued. Every payout for a member earning higher pension is costing the pension fund nearly ₹25 lakh. It’s a defined benefit scheme and the money is coming out of the same pool. It is not coming out of some indefinite pool. It is not a corpus which funded by the government.
It is coming out of the present corpus of the fund. If I drain that corpus to fulfill the pension for a few people now, what happens when the time comes when the current members retire? So, it can’t be a ponzi scheme,” the CEO said, adding that there is no thought on extending the window. “EPS is meant for the poorer sections of formal sector workers. I can’t rob Peter to pay Paul. There is a mistaken apprehension that there is a lot of money. But higher pension for a few out of this is going to deprive 10 more people or 20 more people of their of the corpus, which is meant for their retirement,” he added.
The BriefWire