EPFO panel approves raising insurance cover to Rs 5.5 lakh
New Delhi, Sep 9: Retirement fund body EPFO's panel on its pension and insurance schemes has approved a proposal to increase the maximum amount assured under the EDLI scheme to Rs 5.5 lakh from Rs 3.6 lakh.
"The Employees' Provident Fund Organisation's Pension and EDLI Implementation Committee has approved the proposal to raise the maximum insurance benefit to Rs 5.5 lakh for its over six crore members under its Employees' Deposit Linked Insurance Scheme in a meeting held here today," a source said.
The committee also approved a separate proposal to do away with the condition of two sets of calculations for computing sum assured for subscribers with less than 12 months of service and after completing 12 months, said the source.
After committee's nod, these proposals will be placed before the EPFO's apex decision making body the Central Board of Trustees' (CBT) headed by the Labour Minister in its meeting scheduled on September 16.
Once the trustees give their nod, the EDLI scheme will be amended by a notification of the ministry. At present, in case of demise of a subscriber after one year continuous service in the same organisation, the nominee gets 20 times of average wage drawn during the past 12 months with 20 per cent bonus on it.
With the wage ceiling of Rs 15,000 per month, the maximum amount assured works out to be Rs 3.6 lakh. The proposal provides that the maximum benefit should be raised to 30 times of the average pay drawn during preceding 12 months in addition to 50 per cent of the average balance of the EPF account subject to a ceiling of Rs 1 lakh.
Once approved by the CBT, the maximum sum assured will increase to Rs 5.5 lakh. In the existing scheme, the subscribers with less than 12 months of service are entitled to a maximum sum of Rs 1.2 lakh.
These category of subscribers are entitled to a sum assured which is equivalent to their average balance in the PF account if it is less than Rs 50,000. In case the PF balance is more than Rs 50,000, they are entitled for the same amount and in addition 40 per cent of the amount above Rs 50,000 subject to a maximum ceiling of Rs 1 lakh.
They are also entitled to 20 per cent bonus over due amount. According to the annual report, the EDLI scheme had a corpus of Rs 15,722.99 crore till March 31.
It received an incremental deposit of Rs 936.12 crore towards the insurance fund in last fiscal. Under the EDLI scheme, 0.5 per cent of the basic wages of workers are contributed as insurance premium every month.
Meanwhile, the Labour Ministry has decided not to extend the grant of exemption to certain organisations beyond March 31, 2015.
These include those being run by public, religious or charitable trusts or endowments (including maths, temples, gurudwaras, wakfs, churches, synagogues, agiaries or other places of public religious worship) or societies and Trusts for religious or charitable or other public purposes.
Thus all workers of these establishment will come under the purview of EPFO and will be provided the social security net by the body.