Sunday, August 1, 2021
Header ad
HomeBusinessSeparate accounts for provident fund, pension for employees on the cards

Separate accounts for provident fund, pension for employees on the cards

  • The aim behind the move is to ensure that employees do not end up withdrawing their savings from the pension fund while withdrawing from the provident fund.
By hindustantimes.com | Written by Shankhyaneel Sarkar | Edited by Avik Roy, Hindustan Times, New Delhi

PUBLISHED ON JUN 23, 2021 06:39 PM IST

The government is planning to separate pension and provident funds with an aim to increase the pension amount employees receive at the end of their careers. The Employees’ Provident Fund Organization (EPFO), which has six crore subscribers covering all the formal sector employees, will be affected once this change comes into force.

The aim behind the move is to ensure that employees do not end up withdrawing their savings from the pension fund while withdrawing from the provident fund. Currently the provident fund and pension fund are part of the same account. Due to job losses due to the pandemic, 70.63 lakh people have withdrawn money saved in these accounts.

How much goes into an employees’ pension account

Out of the 24% contribution made by the employee and the employer towards one’s provident fund, 8.33% goes into Employees Pension Scheme (EPS) and rest in provident fund. Employees often while withdrawing from their provident fund end up withdrawing from their pension accounts too. The separation of the accounts will stop the withdrawal from the EPS.

An EPFO member said that the current sentiment among employees is to have a larger pension income following their retirement, according to a report by ABP News. The separation of the account will also allow employees to put more money in the pension fund.

The government may introduce two schemes – one for people earning less than 15,000 and another for people earning more than 15,000. The government currently contributes 1.16% to the accounts of those earning less than 15,000 and may continue to do so.

Close

Source link

RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest News