EPFO administrative charges cut; How employees will benefit

Retirement fund body EPFO’s decision to cut administrative charges from June 1, 2018 is likely to benefit over 5 lakh employers, who would be able to save around Rs 900 crore annually. The Employees’ Provident Fund Organisation took this decision in view of its expanding business and high recovery of such fees. According to report, the EPFO trustees had decided to cut the administrative charges to 0.50% from 0.65% of total wage paid by employers in its meeting on February 21, 2018. While this is good news for employers, for employees this is great news! Why? An increasing number of them will now get the chance to enter the formal sector. Till now, the costs involved were so prohibitive that employers shunned the EPFO route.
EPFO’s central provident fund commissioner V P Joy said, “The labour ministry has notified the decision to cut administrative charges, which would be effective from June 1, 2018. This will encourage employers to formalise their workers’ employment by bringing them under the ambit of social security schemes run by the EPFO”.
Joy further said that the EPFO would not be affected by the cut in administrative charges because of increasing subscribers’ contribution base. He was speaking to PTI. During the last fiscal, the EPFO had reportedly collected around Rs 3,800 crore as administrative charges from the employers for running its social security schemes, accumulating a surplus of over Rs 20,000 crore in the administrative charges account, which earns an interest income of over Rs 1,600 crore per annum.
Recently, the EPFO asked its field offices to credit Provident Fund interest rate of 8.55 per cent for 2017-18, the lowest rate subscribers will get since 2012-13 fiscal. The Labour Ministry conveyed approval of the Centre to credit 8.55 per cent rate of interest for 2017-18 into PF accounts of members, the EPFO order to its more than 120 field offices stated.
The Finance Ministry had ratified 8.55 per cent rate of interest on EPF for the last fiscal, but it failed to implement the same because of model code of conduct for Karnataka elections.
Source: Zee Business