Scheme portability: Labour Ministry appears to widen pension ambit

The labour Ministry is contemplating bringing in a proposal to tweak the foundations for pension scheme below the Employees’ Provident Fund Organisation (EPFO) to make sure wider protection for staff who transfer into unorganised sectors. The Ministry is taking a look at permitting voluntary pension contributions from staff below the Employees’ Pension Scheme 1995 (EPS-95), even when they’ve exited the organised sector. The proposal will probably be taken up for dialogue within the EPFO’s Board meet on March 11-12, aside from the rate of interest for FY22 and switch of unclaimed deposits in direction of senior residents’ welfare fund.

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This would mark step one in direction of guaranteeing portability of social safety and convergence of schemes to make sure universalisation of social safety for staff of each organised and unorganised sectors, a senior Labour Ministry official stated. “This was discussed in the committee’s meetings. It was felt that workers are unable to contribute to their pension. Say, there are construction workers who work in firms with 20 or more workers, so they contribute to EPFO, but if they work for an establishment employing less than 20 workers or work independently as a mason or any other work form, then they are out of the ambit of the organised sector and so are unable to contribute under the EPFO. The government is looking at how their contribution can continue voluntarily even after they have exited the organised sector,” the official informed The Indian Express.

“As of now, this option does not exist for workers who slip out of the ambit of EPFO. The committee is of the view that this should be done. Pension contributions have to be made continuously for ten years for the worker to be eligible to avail it, so such tweaking will help them avail pension benefit even if they work in the unorganised sector,” the official added.

The Ministry had fashioned 4 sub-committees in November for establishment-related issues, futuristic implementation of the Social Security Code, digital capability constructing and pension associated points. At current, all these staff within the organised sector whose primary wage (primary pay plus dearness allowance) is as much as Rs 15,000 monthly on the time of becoming a member of service are mandatorily lined below EPS-95, with 8.33 per cent of the employer’s contribution going in direction of EPS and the remaining 3.67 per cent in direction of EPF.

The rising view inside policymakers is that it’s needed to construct a method in direction of convergence of social safety schemes addressing the motion of labour between the organised and unorganised segments. “The e-Shram portal, aimed for unorganised sector, is doing registrations based on the format of the 12-digit UAN number, which also exists for EPFO. Hence, the UAN will be common for workers and it can then be identified which segment he is working for. A worker is not permanently organised or unorganised, about 50 per cent of the EPF subscribers move in and out either between two companies or between unorganised and organised sectors. If the worker, say, is working in the EPFO, he will get benefits and if he moves out, then we will see what different kinds of schemes he can get,” the official stated.