EPFO reduces provident fund contribution from 12% to 10%

EPFO is lower the EPF contribution by both employers and employees to 10% from 12%. Ministry of Labour suggested reducing only the employers’ contribution. EPFO aimed at ensuring that the provident fund is at par with other social security schemes.

EPFO board meeting decides to lower of the employer’s share of contribution from present 12% to 10%. CBT is the apex decision-making body of EPFO, the government’s pension fund manager. The labour minister is the chairman of the board.

On many occasions the demands to review the present rate of EPF contribution and placing it at par with other social security schemes, such as National Pension System (NPS), etc. EPFO is requested to place an agenda item for lowering the employer’s share from the present 12% to 10% with details in the ensuing meeting of the CBT for deliberation and decision by the board. Labour ministry’s suggestion is the opposite of what earlier thinking of EPFO was—to reduce employee contribution to boost the monthly take-home pay.

After sensing that lowering only the employer’s contribution will lead to a controversy, that’s why EPFO decide to lower the contribution of both employees and employers. One of expert said lowering the PF contribution may facilitate widening the coverage as well as improving the take-home pay of EPF subscribers.

Currently, an employee contributes 12% of his or her basic pay as mandatory EPF contribution every month, and a matching amount is contributed by employers. EPFO manages a retirement corpus of over Rs8.5 trillion and has an active subscriber base of nearly 40 million.

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