New Delhi: Retirement fund body EPFO has decided to reduce the administrative charges to 0.65% of total wages of an employee from 1 April, a move that will result in savings of around Rs1,000 crore annually for about 6 lakh employers.
The Employees provident Fund Organisation’s (EPFO) decision making body, the Central Board of Trustee, had approved the proposal to reduce the administrative charges to 0.65% from the existing 0.85% of total wages, on which contributions are payable.
“The labour ministry has notified the decision taken by the EPFO trustees last year to cut the administrative charge to 0.65%. This will result in total annual savings of Rs1,000 crore for around six lakh employers covered by the EPFO," a source said.
The source said the new rate of administrative charge would be applicable from 1 April 2017. However, the notification provides that the employer would have to pay a minimum sum of Rs70 per month for every non-functional establishment having no contributory member and Rs500 per month each for other firms.
The source said the labour ministry has also notified the decision of the trustee to abolish administrative charges on firms to fund expenditure in implementing the Employees’ Deposit Linked Insurance Scheme (EDLI), 1976 from 1 April 2017.
After implementation of this decision now, the EPFO will meet all the administrative expenses of the EDLI scheme from interest of the EDLI corpus.
At present, the rate of administrative charges to run EDLI scheme is 0.01% while inspection charges are 0.005% for firms, which subscribes to insurance schemes in lieu of EDLI Scheme.
The total corpus in EDLI administration account as on 31 March 2016 was Rs2,372.83 crore. The interest generated on such a corpus would be around Rs17.5 crore annually.