November 22, 2017

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Threat of bankruptcy looming over EPFO due to pension outflow

The constant demand for increased demands by the employees has led to the Employee’s Provident Fund Organization to announce that it has no more capacity to raise pension of employees up to their expectations.  As it will not only make the organization bankrupt but will also put the investment of users in its schemes in jeopardy.

The 1995 Employee’s Pension Scheme was introduced with a provision early last year, giving the beneficiaries an opportunity to contribute 8.33% of their actual salary to their pension, instead of salary ceiling. Thus putting a cap on their salary at Rs 15, 000.

Image result for epfo
Image Source - EPFO 

According to the erstwhile commissioner of the organization, there are approximately 1- 2lakh people who get salaries on the basis of the contributions they make. However, after computing it was realized the even though the PSU staff did not make any contributions, they still got more salaries, and the EPFO staff even after making contributions was paid less.

If the pension hike is implemented by the organization it will most likely go bankrupt, as not all members have made the required contributions, mainly because the scheme was not promoted very well in the EPFO. 


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