If you have not made any contribution to your Employee Provident Fund
(EPF) account in last 36 months; there’s good news for you. The
Government is still going to pay you interest on your balance in the
account. This move will be effective from April 01, 2016.
UPA Government had discontinued the practice of paying interest on inoperative accounts from April 01, 2011thinking that it will discourage participants from opting out. There are close to 9 crore dormant accounts with a corpus of over Rs 32,000 crore. Employees' Provident Fund Organisation's (EPFO) manages around Rs 8.5 lakh crore.
Commenting on this news, the Labour Minister Bandaru Dattatreya said, “Now, we have decided to credit interest in inoperative accounts. There will not be any inoperative accounts.” This was a much-needed clarification, which will bring relief to those who change jobs. There’s always a possibility that a person turns his employment and moves to a company that doesn’t qualify to implement the provident fund scheme. In such a case, his account would go inoperative for no fault on his part.
A few more changes
The Government has worked out a proposal to alter the the minimum number of workers criterion for it being compulsory for companies to cover its employees under Employee Provident Fund Scheme. The number is expected to reduce from 20 to 10. As narrated by a senior Government official, such a move will provide social security to about 50 lakh more people working in the organized sector. With this step, total Assets under Management (AUM) of EPFO is expected to go up by Rs 20 lakh crore.
With an aim of providing more leeway to EPFO, the Government also increased the upper limit for investing in Sovereign Securities from 50% to 65%. This may enhance the quantum of investments in G-secs by about Rs 11,000 crore every year. This might provide depth to the Government Securities market.
Experts believe that all of the above changes would make the provident fund scheme more employee friendly and help enhance the social security net to people who are currently not covered. However, you should not depend entirely on Provident Fund for your retirement. Start building a kitty for your retirement from the time you earn your first salary.
UPA Government had discontinued the practice of paying interest on inoperative accounts from April 01, 2011thinking that it will discourage participants from opting out. There are close to 9 crore dormant accounts with a corpus of over Rs 32,000 crore. Employees' Provident Fund Organisation's (EPFO) manages around Rs 8.5 lakh crore.
Commenting on this news, the Labour Minister Bandaru Dattatreya said, “Now, we have decided to credit interest in inoperative accounts. There will not be any inoperative accounts.” This was a much-needed clarification, which will bring relief to those who change jobs. There’s always a possibility that a person turns his employment and moves to a company that doesn’t qualify to implement the provident fund scheme. In such a case, his account would go inoperative for no fault on his part.
A few more changes
The Government has worked out a proposal to alter the the minimum number of workers criterion for it being compulsory for companies to cover its employees under Employee Provident Fund Scheme. The number is expected to reduce from 20 to 10. As narrated by a senior Government official, such a move will provide social security to about 50 lakh more people working in the organized sector. With this step, total Assets under Management (AUM) of EPFO is expected to go up by Rs 20 lakh crore.
With an aim of providing more leeway to EPFO, the Government also increased the upper limit for investing in Sovereign Securities from 50% to 65%. This may enhance the quantum of investments in G-secs by about Rs 11,000 crore every year. This might provide depth to the Government Securities market.
Experts believe that all of the above changes would make the provident fund scheme more employee friendly and help enhance the social security net to people who are currently not covered. However, you should not depend entirely on Provident Fund for your retirement. Start building a kitty for your retirement from the time you earn your first salary.
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