Government removes optional provident fund feature for workers


The social security scheme will cover all employees of all sectors, irrespective of income.

The Central Government is going to abandon the plan of optional provident fund for employees with relatively low wages. This is in accordance with the Government’s social security scheme plan, which will cover all employees—irrespective of their income, whether from the organised or unorganised sector, self-employed, part-time or casual.

As per the Labour Ministry, benefits, such as mandatory EPF, pension and insurance will be made available to all workers. Also, as per the Employees’ Provident Fund and Miscellaneous Provisions Act (EPF & MP), it is mandatory for all organisations with 20 or more employees to join the EPF scheme.

Earlier, the Government had made it optional for the employees with low wages to contribute to the provident fund, as their income was low and there had to be enough to help meet their household needs.

The EPF & MP Act, 1952, which was amended earlier to make EPF optional, will now be amended further.

This change is going to impact workers all over the country. Currently, only 10 percent of the total labour force in India subscribes to the EPF scheme. As of March 2016, there are 9.26 lakh institutions, which come under the EPFO.

According to the Social Security and Welfare Code, the Government will provide welfare fund along with the contributions by employees and employers to create social security funds in each state. The fund amount collected will be used to provide benefits, such as pension, provident fund, group insurance, as well as sickness and maternity benefits. Wherever the workers are unable to contribute to this fund the Government will contribute on behalf of them.


  1. I am Sr. citizen retired recently and opted CPF in 1987. But it has no component of pension then? While in 6 Pay Commission it had given option to covert all people to Pension scheme. But this option was not extended in 7 Pay Commission Why? This should have been extended as a welfare measure for retired people. Pl. explore to give one more option to switch over from CPF to GPF this will be a big boost for the present government and great relief to sr. citizens in particular.

Comment on the Article

Please enter your comment!
Please enter your name here

five × 5 =