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Baby steps to PF act overhaul

Calcutta, July 7: The central government has formed a working group to suggest amendments to the provident fund act.

“The committee will submit its draft in three months after which public opinion will be sought on the proposed changes,” Samirendra Chatterjee, the Central Provident Fund Commissioner (CPFC), said at a seminar organised by the Indian Chamber of Commerce here today. The labour ministry in May had approved the working group.

Meanwhile, the Employees’ Provident Fund Organisation (EPFO) is considering major changes in all the three schemes under its administration — the provident fund scheme, deposit-linked insurance scheme and pension scheme.

In provident funds, the EPFO is against crediting interest in accounts that are inoperative for more than 36 months. Interest should be paid only when a claim to withdraw money from the account is made, Chatterjee said.

According to Chatterjee, there are around two crore such accounts involving a sum of Rs 15,000 crore. Half of these accounts have balances of Rs 1,000 or less. The EPFO has accounts of nearly six crore individuals.

The EPFO plans to convert the deposit-linked insurance plan into a group insurance scheme so that employees get a higher cover.

The proposal on pension is to appoint life insurance companies from whom employees can buy annuities with the accumulated corpus in their accounts.

The pension scheme is running an actuarial deficit — the difference between the payment liability and current deposits — as high as Rs 22,000 crore.

“All these changes are in the proposal stage and we are yet to submit these before the Central Board of Trustees for its consideration,” Chatterjee said.

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