Formal sector workers may soon have an option to choose between EPF scheme run by retirement fund body EPFO and the New Pension Scheme (NPS) as also between and health insurance products and Employees State Insurance Corporation's (ESIC) health cover.
It is also proposed that for workers getting wages below a certain threshold, contribution to EPF (Employees' Provident Fund) will be optional. However, their employers would have to contribute towards the scheme.
"With respect to the EPF, the employee needs to be provided two options. Firstly, the employee may opt for EPF or the New Pension Scheme (NPS)...For employees below a certain threshold of monthly income, contribution to EPF should be optional, without affecting or reducing the employer's contribution," Jaitley said in the Parliament.
He further said that the employee should have an option of choosing either ESI (health cover) or a health insurance, recognised by Insurance Regulatory Development Authority.
He said that the government intend to bring amending legislation in this regard, after stakeholder consultation.
At present, over five crore workers are covered under the mandatory social security schemes run by the Employees' Provident Fund Organisation (EPFO).
The NPS is applicable to all employees of Central government service (except Armed Forces) and central autonomous bodies joining service on or after January 1, 2004.
Explaining about the proposal Jaitley said,"the situation with regard to the dormant EPF accounts and the claim ratios of ESIs is too well known to be repeated here. It has been remarked that both EPF and ESI have hostages, rather than clients...The low paid worker suffers deductions greater than the better paid workers, in percentage terms."
The Minister also announced to use unclaimed deposits of about Rs 3,000 crore in the PPF, and Rs 6,000 crore in the EPF corpus to create a Senior Citizen Welfare Fund, in the Finance Bill.
This corpus will be used to subsidise the premiums of vulnerable groups such as old age pensioners, BPL card holders, small and marginal farmers and others. A detailed scheme would be issued in March.