More`s merrier for PF body

The Central Board of Trustees of the Employees' Provident Fund Organisation today recommended expansion in the coverage of employees under its scheme, while deferring a decision on raising the interest rate from 8.5 per cent for 2008-09.

In what is seen as a pre-election bounty, the board recommended lowering of the threshold for EPF coverage to include all establishments that have at least 10 employees, and all cooperatives that have at least 20 employees.

At present, the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, only covers establishments with 20 or more employees. In the case of co-operatives, the number is 50.

The move along with the social security cover envisaged for the unorganised sector under the unorganised sector Bill is expected to lead to a huge expansion of social security cover.

While the Unorganised Sector Bill is expected to provide social security benefits such as health insurance to units employing less than 10 people, the EPF expansion would now take care of establishments with employees numbering 10 and above.

The EPF, which currently covers 40 million beneficiaries, will double this number after the government amends the Act as per the CBT recommendation, CBT secretariat member and CBT trustee W R Varadarajan said.

The government's share in the EPF, which goes to the pension fund of employees at the rate of 1.16 per cent per worker, would also double from the current Rs 500 crore. Under the scheme, employers pay 12 per cent of the salary as PF and the employee pays an equal amount.

The Board has been criticised for deferring a hike in the PF interest rates. There has been a demand to raise the rates from 8.5 per cent to 12 per cent in the face of growing inflation.

Varadarajan said that the interest rates should be restored to 12 per cent as it prevailed in 2000. At that time the rate was lowered as inflation figures went down to 3 per cent.

But now that inflation figures have entered double digits, it is justified that PF rates be restored at 12 per cent, the CITU member said.

WIDE COVERAGE

PF body recommended lowering of the threshold for EPF coverage to include all establishments that have at least 10 employees

All cooperatives that have at least 20 employees also included

The Employees' Provident Funds and Miscellaneous Provisions Act, 1952, covers only establishments with 20 or more employees . For co-operatives, the number is 50