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Rediff News  All News  » Business » Govt reviewing EPF scheme

Govt reviewing EPF scheme

February 26, 2009 14:39 IST

The Employees Provident Fund scheme is being reviewed to assess how better benefits could be provided to employees and two committees have been set up for the purpose, government told the Lok Sabha on Thursday.

Replying to a Calling Attention Motion, labour minister Oscar Fernandes, however, said there will be no amendment to the Employees' Pension Scheme 1995 in the wake of Sixth Central Pay Commission as the two issues are not related.

He said two committees, including one headed by a special secretary, have been set up to review the EPF scheme and ensure that it brings better benefits to the employees.

"We are reviewing the scheme. We are taking a relook at the scheme," Fernandes said.

A decision will be taken after the committees submit their recommendations, he said.

The minister said discussions are underway to see how the corpus for the scheme could be raised, which will require hiking of contribution by the government as well as the employers.

The minister said under the present scheme, commutation of pensionary benefits is permitted, which has led to the loss of Rs 40,000 crore (Rs 400 billion).

Employees use this facility and as a result lose their pensionary benefits, he said, adding the government has already decided to stop commutation.

When former labour minister G Venkatswamy pointed out that family members of government employees in many cases do not get pensionary benefits after the demise of employee, Fernandes said he did not rule out lapses in implementation.

He, however, said that benefits are to be given to wife of an employee after his death and to children after the death of wife. Second generation of an employee cannot avail of the scheme, he said.

On the Employees Pension Scheme of 1995, Fernandes said it is directly related to pensionable salary and length of service and super-annuation at the age of 58.

"Low salary and low length of service and option for early pension are the main factors for very low pension amount under EPS'95," he said.

An exercise for valuation of Pension Fund is on and the decision on altering the benefits will be taken on the results of valuation, the minister said.

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