The labour ministry has said the additional contribution of 1.16 per cent of basic wages for subscribers opting for higher pensions will be managed from employers’ contributions to social security schemes run by the Employers Provident Fund Organisation (EPFO).
In a statement, the labour ministry said, “It has been decided to draw a 1.16 per cent additional contribution from within the overall 12 per cent of the contribution of the employers into the provident fund.”
The ministry said the spirit of the EPF and MP Act, as well as the code (Code on Social Security), do not envisage contributions from employees to the pension fund.
Currently, the government pays 1.16 per cent of the basic wages up to Rs 15,000 as a subsidy for contributions towards the Employees Pension Scheme (EPS).
Meanwhile, employers contribute 12 per cent of basic wages towards social security schemes run by the EPFO.
As much as 8.33 per cent out of the 12 per cent contributed by employers goes into the EPS and the remaining 3.67 per cent is credited into the EPF.
What happens under new higher EPF provision?
All EPFO members who are opting to contribute on their actual basic wage – which becomes higher than the threshold of Rs 15,000 per month – for getting higher pension will not have to contribute this additional 1.16 per cent towards EPS.
The ministry said this provision is retrospective in nature and in line with the directions given by the Supreme Court.
The Ministry of Labour and Employment issued two notifications on May 3, 2023, to implement the decision.
Finally Higher EPF Pension deadline extended A few days ago, the retirement body EPFO extended the date for filing applications to opt for a higher EPF pension till June 26, 2023.