The Central Board of Trustees (CBT) has turned down the proposal to reduce the mandatory contributions from workers and employers to 10 per cent.
What was being seen as a step towards increasing the take home salary of employees, the Employees Provident Fund Organisation’s proposal to cut companies’ or employers’ contribution towards retirement corpus of their staff by two percent, has been rejected.
The highest decision making authority of the EPFO, the Central Board of Trustees (CBT) has turned down the proposal to reduce the mandatory contributions from workers and employers to 10 per cent.
Currently, an employee gives away 12 per cent of his or her basic salary towards their provident fund contributions. The employers also make an equal contribution to the retirement fund. Employees and employers contribute 12 per cent of basic wages each towards Employees Provident Fund Scheme (EPF), Employee Pension Scheme (EPS) and Employee Deposit Linked Insurance Scheme (EDLI).
The proposal to reduce the contributions by employers and employees to 10 per cent of basic wages, including basic pay and dearness allowance, was listed on the agenda for meeting of the Employees’ Provident Fund Organisation (EPFO), which was held in Pune last Saturday.
If some reports are to be believed, the proposal of reducing employers’ contribution saw vehement protests from the states, as well as workers’ and employers’ representatives, leaving the Centre with no option but to withdraw the proposal.
Both the employer and employees along with the government representatives, expressed their apprehensions about the proposal and they agreed that the PF contribution should continue at 12 per cent.