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July 15 in History
Events and happenings on 15 July in History
15 July 2001
Highlights: Second Phase of Panchayat Elections ends
15 July 2002
Highlights: 25% of Intermediate marks to be taken as weightage for EAMCET
15 July 2003
15 July 2004
Highlights: Congress and TDP workers clash
15 July 2005
Highlights: World Bank to fund Urban Reforms Project
15 July 2006
15 July 2007
Highlights: APSRTC celebrates Platinum Jubilee celebrations
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CBT considers no proposal on differential rate of interest for EPF members, says EPFO
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New Delhi: July 15, 2004
The Employees Provident Fund Organisation (EPFO) has denied reports appearing in
a section of the print media that the Central Board of Trustees (CBT) in its
168th meeting on 30th June 2004 considered a suggestion on declaring a
differential rate of interest for different categories of EPF members. It has
clarified that no such discussion took place during the aforesaid meeting of the
CBT and such a proposition was neither mooted nor considered. The EPFO has
further clarified that a differential rate of interest for members is not
consistent with the provisions of the EPF Scheme, 1952 as the word used is
'rate’ and not 'rates’ of interest to be credited to the account of each EPF
beneficiary.
According to the EPFO, all members, whether covered through mandate of law or in a voluntarily manner are indistinguishable once they become members. Those, who are covered voluntarily, have not been given the option of opting out.
The modernization programme of the EPFO has, no doubt, enabled improved cuts of information from the existing data and this enables the Central Board to consider the issue with improved decision support systems and reports.
A money segment analysis shows that 93 % of the total 3.94 crore members have balances below Rs.50,000/- and 85.39% of the total membership have balances below Rs. 20,000/- . The average balance in this category is Rs. 2,928/-. The average balance in the category between Rs. 20,000/- and Rs. 50,000/- is Rs. 41,719/- per member. In aggregate for the 93% of the membership i.e. those below Rs. 50,000/- the average balance is Rs. 6,203/-.For the remaining 7% of the membership in the bracket of Rs. 50,000/- to Rs. 50 lakh and above, the average balance per member is Rs. 88,729/-.
The above analysis suggests two clear trends. The first is that the bulk of the members draw and utilize their EPF monies while in employment itself and balances are not being built up as a retirement saving to be received on exit from the workforce. The second is repeated job-hopping, whether voluntary or involuntary, which is the leading to dissipation of EPF balances. Members choose to take final settlement at the point of a job change instead of asking for a transfer of account, which is required procedure. 90% of the final settlements are resignation cases and not superannuation cases where the job change is not disclosed to EPF. Lack of a nationally unique social security number facilitates this unhealthy trend which is inconsistent with the legislative intent behind the statute.
Those who retain and build up retirement savings are amongst the 7% of the membership who would largely constitute members who join voluntarily. In addition to building retirement savings, this category also enjoys the benefits of favoured tax treatment. These members are not under any financial pressure to withdraw EPF monies during employment and hence their balances have accumulated.
Press Release: PIB
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