The EPFO said that the cut in EPF contribution is intended to provide some benefits to 4.3 crore employees and employers of 6.5 lakh institutions to overcome the cash crisis. This will not affect the pension.
The Special Correspondent
Employees Provident Fund Organization (EPFO) says that the objective of reducing the contribution to EPF from 12 to 10 per cent is to provide more cash to companies and employees. Reduced contribution to EPF will not affect employee’s pension. According to EPFO , the cut in EPF is aimed at providing some immediate benefits to employers and members of 4.3 crore employees and 6.5 lakh institutions to overcome the cash crisis.
The EPFO clarified that the impact on pension will not affect the
entire 12% contribution from the employee to the EPF but 8.33% of the employer’s 12% contribution goes to the Employee Pension Scheme. As the EPF contribution has decreased for 3 months, there was ambiguity as to whether the employee’s pension would be affected by it. Now EPFO has cleared this ambiguity.
EPF contribution for 10-10% till July
EPFO says that if the monthly EPF salary is 10000 then the salary of the employee will be deducted 1000 rupees instead of 1200 rupees and the employer will have to pay 1000 rupees instead of 1200 rupees as EPF contribution. Employers (company) and employees (employees) in the case of companies under EPFO and their employees who are not getting the benefit of contribution from the government under the PM Garib Kalyan Package from three months ie from May to July. EPF contribution of 10–10 per cent. However government institutions i.e. CPSE and State PSU and employees working in them will not come under the purview of this reduced PF contribution. Significantly, in EPF, the contribution of both company and employee is usually 12-12% of the employee’s basic salary + DA, i.e. 24% of the total.
The remaining contribution of EPS will go to EPF
EPFO believes that the purpose of reducing the contribution to EPF for three months is to provide cash to the employees along with the company. It is necessary in the then circumstances. This will increase the availability of cash with companies, more money will also come in the hands of employees. According to EPFO, 8.33 percent of the 10 percent EPF contribution from the company will go towards EPS for the next 3 months. The remaining 1.67 percent will go to the employee’s EPF.
The government will make a contribution.
It is worth mentioning that under the PM Garib Kalyan package, the government itself has to make a contribution to the EPF by August 2020, for companies in which up to 100 employees are present and 90% of them have a salary of Rs 15,000 or less. is announced. Apart from these, the contribution of other employees and companies in EPF has been reduced to 10% for three months.