Home >Politics >Policy >EPF number portability unlikely before 2019

New Delhi: The much-awaited Employees’ Provident Fund (EPF) number portability, which would allow organized sector workers to choose between EPF and the National Pension Scheme (NPS), is unlikely to be implemented before 2019.

Labour minister Bandaru Dattatreya’s omission from the cabinet in the September reshuffle and opposition from the Bharatiya Mazdoor Sangh (BMS), the labour union affiliated to the Rashtriya Swayamsevak Sangh (RSS), are the two key reasons why the move is being put on the back burner, two government officials said on condition of anonymity. RSS is the ideological parent of the ruling Bharatiya Janata Party (BJP).

“PF number portability was seen as a progressive reform initiative by the government. Both EPFO and NPS authorities were on board to effect the change. But popular opposition is holding back the ministry," one of the officials said.

Allowing EPF subscribers to keep their PF account while shifting jobs was termed the first part of PF portability; allowing EPF subscribers to shift to NPS was to mark the completion of the plan. The labour ministry wanted to add a new clause in the EPF Act, allowing organized sector employees to shift to NPS for greater exposure to equities and possibly better returns.

According to the new clause, “the employees of the establishments to whom the (EPF) Act applies shall have an option for joining the New Pension Scheme of the Pension Fund Regulatory and Development Authority (PFRDA), by submitting application to the Commissioner in such form and in such manner as may be specified in the Scheme."

Once a subscriber moves to NPS the EPF Act will no longer apply to the employee, or a class of employees, the ministry explained in a new section it added to the law. PFRDA chairman Hemant Contractor said unless the EPF Act was amended, it wouldn’t be possible for EPF subscribers to move to NPS. “We have discussed with the government and they say that they are working on it. So far nothing has happened," he said.

According to Contractor, the NPS should be put on par with the EPF, subject to the same tax treatment. While EPF is a completely tax-free product, a portion of the NPS is taxable at the time of withdrawal.

The second official said bureaucrats in the ministry need to make fresh presentations to Santosh Gangwar, the new labour minister. “Since the issue is politically sensitive, he will take his own time. Besides, in the last few months, trade unions, especially RSS-affiliate BMS has been opposing it vehemently, holding back the ministry...It may not happen till 2019," said the official.

The BMS is “strictly" opposed to the portability proposal, said Virjesh Upadhyay, general secretary of the BMS.

“NPS and EPF are not similar products. EPFO offers more facilities to workers including PF, insurance, pension, death benefits, which is largely missing in NPS," he added. “You cannot make NPS and EPF an alternate arrangement. It will kill social security benefits a worker enjoys."

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