E PFO hikes life insurance for EPF-covered employees from Feb 15, 2018
The Employees’ Provident Fund Organisation (EPFO) has enhanced the minimum assurance limit under its Employees’ Deposit Linked Insurance Scheme (EDLI) through a gazette notification dated February 15 2018.
Here is why. The assurance benefit to an eligible employee will now stand at a minimum of Rs 2.5 lakh and will be capped at Rs 6 lakh. According to the notification, such provisions will be in force for a period of two years from the date of publication of this Scheme in the Official Gazette, i.e., February 15 2018. Earlier, the minimum amount of benefit was set at Rs 1.5 lakh in September 2015. EPFO Central Board of Trustees’ (CBT) had decided to increase maximum benefits under the EDLI scheme from Rs 3.6 lakh to Rs 6 lakh.
What is Employees’ Deposit Linked Insurance Scheme
All members of EPF are automatically covered under EDLI. The Employees’ Deposit-Linked Insurance Scheme, 1976 provides for an “Assurance benefit”, i.e., an insurance cover to be paid to the employee’s nominee on death during one’s working life. It’s a payment linked to the average balance in the provident fund account of an employee, payable to a person belonging to his family in the event of death of the employee while being a member of the Fund.
One need not separately add nominee for this as the EDLI scheme applies to all employees under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
Contribution under EDLI
The employee need not contribute separately for the benefit under the EDI scheme, only the employer has to contribute. The contribution by the employer is 0.5 percent of the employee’s wages and the contribution is to be paid on up to maximum wage ceiling of Rs 15,000 even if PF is paid on higher wages. The maximum, therefore, is capped at Rs 75 and is to be paid as long as the member is in service and PF is being paid. As per the rules, the employer is not entitled to deduct the employer’s contribution payable by him from the wages of the employees or to recover it from them in any other manner.
Here is how the benefit under EDLI is calculated
The average monthly wages drawn (subject to a PF wage ceiling of Rs 15,000), during the twelve months preceding the month in which the employee dies, is multiplied by 30 times plus 50% of the average balance in the account of the deceased in the provident fund during the preceding 12 months or during the period of his membership, whichever is less. The minimum payable will now be Rs 2.5 lakh while the maximum will be Rs 6 lakh.
EPFO cuts down interest rate to 8.55% from 8.65%
Employees’ Provident Fund Organisation (EPFO) has reduced the interest rate on deposits to 8.55% for the financial year 2017-18. The decision was taken by EPFO’s central board of trustees at its 220th board meeting. EPFO had announced an interest rate of 8.65% for 2016-17 and 8.8% in 2015-16. The interest rate decided by the central board of trustees will have to be vetted by the finance ministry, following which it would be notified.
EPFO reduces administrative charges to 0.50% from 0.65%
EPFO Central Board of Trustees’ (CBT) had decided to reduce the administrative charges from 0.65% to 0.50% of total wages paid by employers effective April 2018.
Effective April 2017, the administrative charge was reduced to 0.65% of total wages of an employee.
EPFO threshold limit of minimum number of employee to reduce from 20 to 10 for coverage under the EPF Act
As per reports, EPFO Central Board of Trustees (CBT) in its 220th Meeting held, has recommended to reduce threshold limit of minimum number of employee from 20 to 10 for coverage under the EPF Act