Employees can expect a good news of hike in their salary, as government is likely to lower the contribution towards universal social security for all workers. According to reports, a Labour ministry committee is likely to recommend a lower contribution by the government towards universal social security. Therefore, the government might cut provident fund contribution by 2 per cent.
At present, 24 per cent from an employee’s salary is deducted for provident fund account, and this is maintained by Employees’ Provident Fund Organisation (EPFO). Out if this, 12 per cent is contributed by the employer while another 12 per cent is deducted from employee’s salary.
Reports claim that by August end, the committee will finalise its recommendations. Under the proposal, the committee aims to increase the coverage of social security scheme to 50 crore people from the current coverage of 10 crore people. After the final recommendations of the committee, the Labour ministry will consult with various stakeholders before adding it to the social security code.
Generally, employer’s contribution to the PF account is included in the total cost to company (CTC) of an employee. If the PF contribution gets reduced, then employees will have an addition 4 per cent of salary credited in their account, hence getting a hike in their salary. This will, however, decrease their savings in PF account.
While EPFO mostly invest your money in fixed income securities, it has recently started investing in ETF’s based on Nifty 50, Sensex, Central Public Sector Enterprises (CPSEs) and Bharat 22 indices. Moreover, EPFO does not invest in shares and equities of individual companies.