The Centre and the EPFO should be guided by a problem-solving approach
new Centralised Pension Payments System (CPPS)
Why in news ?
recent official announcement about the successful pilot run of the new Centralised Pension Payments System (CPPS)
under the Employees’ Pension Scheme, 1995, comes at a time when lakhs of members of the Employees’ Provident Fund Organisation (EPFO) and pensioners have been waiting to hear about their applications for pension on higher wages.
Some questions remain
CPPS is a relief to new pensioners ?
1 They will not be required to open an account in specified banks just to receive their monthly entitlement.
2 Under the new system that will come into force from January 1 across the country, pensioners can collect their pension from any bank branch in India.
3 Also, they are no longer required to go to the bank for verification at the time of commencement of pension.
कुछ मुद्दों पर चर्चा होनी चाहिए ?
These include
- Late processing applications for pension on higher wages quickly,
- increasing the minimum pension amount of ₹1,000 and the wage ceiling of ₹15,000 under the EPF,
- and restoring the universal applicability of EPS to all PF members, regardless of their pay.
came into effect on September 1, 2014. There have been demands from employees’ representatives and trade unions for revising the
- minimum pension to ₹9,000
- wage ceiling to ₹40,000.
Delay in application process
Even two years after the Supreme Court approved the principle of payment of pension on higher wages (on wages that exceeded the PF ceiling), the progress made in processing the applications has been slow.
About 1.3 million net applications were pending with the authorities for clearance as on August 7, according to an EPFO reply given under the Right to Information Act.
The authorities had issued pension payment orders to about 8,400 applicants, approving the payment of pension on higher wages.
They also issued demand notices
to about 89,000 persons, which required them to transfer their share of the difference.
This was because the pensionable salary of the applicants was higher than the wage ceiling and the contributions by their employers to the Pension Fund would have been limited only to the extent of the wage ceiling.
Issue related calculation of higher pension
The EPFO expects applicants and their employers to submit very old documents — for example, pay slips issued to employees 25 years ago — which are not available in many cases.
Invariably, the applicants, whether they are in service or not, are aware that they will have to give their consent for transfer of a certain portion of their savings to the EPFO before they start receiving their enhanced pension.
.
No cash flow problems
कुछ और बड़ी कमियां
The EPFO is said to be carrying out actuarial valuations for every batch of 50,000 demand letters issued.
An evaluation of sample data of 38,000 applicants showed a deficit of around ₹ 9,500 crore (about ₹25 lakh per person).
According to the establishment, such a situation will eventually erode the sustainability of the pension fund and jeopardise social security coverage of lower pension earners.
2023 not witnessed any cash flow problems
However, the EPFO’s annual report for 2022-23 pointed out that the fund had not witnessed any cash flow problems in the last five years.
Growth
despite the pandemic
there was a steady rise in annual contributions to the fund as well as the corpus, which is made up of contribution by employers at 8.33% of wages and from the Centre through budgetary support at 1.16% of wages up to ₹15,000 per month.
In fact, in the three years ending March 2023, the increase in annual contributions was about ₹13,000 crore and the corpus rose by nearly ₹2.5 lakh crore.
The draft annual report for 2023-24, discussed by the Executive Committee of the EPFO’s Central Board on November 8, also referred to the growth in the number of contributing establishments and members in the range of 6.6%-7.6%.
WAY FORWARD
It is time that the Union government and the EPFO looked beyond actuarial deficit.
increase the existing quantum (12%) of contributions by employers and employees to the PF.
In case the government and the EPFO believe that there are genuine difficulties in providing higher pension to all the eligible applicants in the next six months or so, they should explain their position publicly and convey what is feasible. Importantly, the Centre and the EPFO should be guided by a problem-solving approach.
ramakrishnan.t@thehindu.co.in
Source the hindu
Comments
Post a Comment