Controversial circular, interest rates kept EPFO busy in 2012
New Delhi: From slashing interest rates on EPF to a controversial circular that proposed to make it difficult to probe defaulting employers and recover provident fund dues of workers, it was an unusual year for the retirement fund body EPFO.
The circular, issued by EPFO head on his last day in service, was red flagged by trade unions as well as internally.
Only after the Labour Ministry's intervention, the Employees' Provident Fund Organisation (EPFO), which manages PF accounts of over 5 crore subscribers, decided to keep in abeyance its implementation.
The EPFO circular has sought to tighten norms for initiation of inquiry against employers in provident fund (PF) cases and clubbing of allowances with basic wages for computing PF contribution.
The circular was issued by the outgoing Central Provident Fund Commissioner of EPFO R C Mishra on his last day before retirement on November 30.
The circular had raised many hackles among industry as well as in trade unions.
The unions openly criticised the move to make procedure of inquiry in PF cases against employers more cumbersome.
The firms, on the other hand, had sulked over EPFO's move to deal with their discretion to split wages that could have increased their PF contribution liability.
However, in a worker friendly move, the EPFO circular had also redefined the meaning of "basic wages" for the purpose of provident fund deductions. It said: "All such allowances which are ordinarily, necessarily and uniformly paid to the employees are to be treated as the basic wages."
The other important decision of the body was slashing of interest rate to 8.25 percent for 2011-12 from 9.5 percent provided in 2010-11.
The silver lining was the facility for members to check monthly updated PF account online following the launch of e-passbook service this year.
According to the circular, the inquiry against employers can only be initiated after "actionable and verifiable information" is placed for consideration before the compliance officers.
With regard to the time period for initiating inquiry, it had said, "no inquiry or investigation shall ordinarily go beyond seven years, i.E., it shall cover the period of default not exceeding preceding seven years."
As far as EPFO's interest rate for the current fiscal is concerned, the preliminary estimates have indicated that it could pay 8.6 percent on PF deposits without losing or gaining anything.
EPFO's apex planning body the Central Board of Trustees (CBT) is likely to decide the rate of interest in its meeting scheduled on January 15 next year.
The new year may bring some cheer for EPFO subscribers as they may get higher rate of interest on PF deposits for this fiscal than 8.25 percent provided in 2011-12.
The EPFO fixing minimum pension of Rs 1,000 for every subscribers could be another big official announcement in the 2013.
The CBT and other authorities are believed to have approved the minimum pension of Rs 1,000 per month for EPFO subscribers. At present there are subscribers who get EPFO pension of less than Rs 100 per month.