NEW DELHI :
The abrogation of Article 370 of the Constitution and the bifurcation of Jammu and Kashmir into two Union territories (UTs) is going to boost the corpus of the Employees’ Provident Fund Organisation (EPFO) as the central retirement savings body is set to take over the state provident fund corpus and bring organized sector employees of the two UTs under its social security net.
The central board of the EPFO has given the go ahead to the proposal, which will bring in more than 12,000 firms and establishments under the pension fund’s ambit, and add around 300,000 subscribers to the scheme. The process is expected to boost the retirement saving corpus by more than ₹15,000 crore, at least two government officials said requesting anonymity.
Workers in Jammu and Kashmir were governed by its EPF scheme of 1961 and the Employees’ Deposit Linked Insurance (EDLI) scheme of 2000.
As the erstwhile state was enjoying special status under Article 370, it was not influenced by the central EPFO Act, which also provides pension benefits to its subscribers other than the provident fund and EDLI benefits.
Now organized sector employees of the UTs of both Jammu and Kashmir, and Ladakh will also be eligible for pension facilities as the employees’ provident fund system of these places is centralized.
“The approval for all the groundwork to extend the EPF Act to both the Union territories has been given," said Michael Dias, a central board member of the EPFO.
“The EPFO corpus will jump as fresh deposits from a few lakh new subscribers is added to the retirement fund. As EPFO is a social security body, more than the jump in corpus, the move will benefit more people by providing a provident fund, pension, and insurance facilities to workers of both the UTs," said one of the two government officials mentioned above.
The application of central EPF Act will be effective from 31 October 2019, said the other official. The central retirement fund body needs to do a lot of spadework, including setting up regional offices and actuarial analysis of the existing funds, to expand the coverage to both Jammu and Kashmir and Ladakh.
“With the promulgation of the EPF Act 1952 in the UTs, from the appointed day, it is imperative for EPFO to put in place mechanisms to facilitate compliance and service delivery such as registration by establishments, remittances of contributions, banking arrangements, enabling IT infrastructure, actuarial analysis of the existing fund and setting up of necessary infrastructure and offices," said a EPFO document reviewed by Mint.
“This will require, liaison with UT administration, advisory committees and will also involve the ministry of home affairs, which is the nodal ministry for this purpose," it said.
With the approval of the EPFO board, the central provident fund commissioner will take decisions to expand the provident fund coverage to the entire Jammu and Kashmir and Ladakh from the coming week itself.