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Business News/ Politics / Policy/  EPFO panel approves raising insurance cover to Rs5.5 lakh
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EPFO panel approves raising insurance cover to Rs5.5 lakh

The proposal provides that the maximum benefit should be raised to 30 times of the average pay drawn during preceding 12 months

A file photo of EPFO house. Photo: MintPremium
A file photo of EPFO house. Photo: Mint

New Delhi: Retirement fund body Employees’ Provident Fund Organisation (EPFO)’s panel on its pension and insurance schemes has approved a proposal to increase the maximum amount assured under the Employees’ Deposit Linked Insurance Scheme (EDLI) scheme to Rs5.5 lakh from Rs3.6 lakh.

“The Employees’ Provident Fund Organisation’s Pension and EDLI Implementation Committee has approved the proposal to raise the maximum insurance benefit to Rs5.5 lakh for its over six crore members under its Employees’ Deposit Linked Insurance Scheme in a meeting held in New Delhi on Wednesday," 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 16 September.

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% bonus on it. With the wage ceiling of Rs15,000 per month, the maximum amount assured works out to be Rs3.6 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% of the average balance of the EPF account subject to a ceiling of Rs1 lakh.

Once approved by the CBT, the maximum sum assured will increase to .5 lakh. In the existing scheme, the subscribers with less than 12 months of service are entitled to a maximum sum of 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 0,000.

In case the PF balance is more than Rs50,000, they are entitled for the same amount and in addition 40% of the amount above Rs50,000 subject to a maximum ceiling of Rs1 lakh. They are also entitled to 20% bonus over due amount. According to the annual report, the EDLI scheme had a corpus of Rs15,722.99 crore till 31 March. It received an incremental deposit of Rs936.12 crore towards the insurance fund in last fiscal.

Under the EDLI scheme, 0.5% 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 31 March, 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.

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Published: 09 Sep 2015, 09:52 PM IST
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