Social security code may let workers choose pension, PF & health schemes
The government is mulling a bouquet of schemes to deliver pension, provident fund and health insurance benefits for all workers in the country — including self-employed and agricultural workers — to choose from, under the social security code being finalised by the labour ministry.
These schemes could either be government run or have private players operating in areas of pension, insurance and provident fund, a senior government official said. Under the proposed scheme, all subscribers under universal social security will have to mandatorily choose at least one from multiple schemes on offer on the three benefits that labour ministry plans to cover in the first phase, the official said, requesting not to be identified.
“Besides, it will retain the identity and originality of all existing schemes including the EPF (Employees’ Provident Fund) and EPS (Employees’ Pension Scheme) under EPFO (Employees’ Provident Fund Organisation),” the official said. Once the social security code comes into being, subscribers will have a choice to either continue with their existing schemes or migrate to another scheme with his/her entire fund kitty after evaluating the returns on each scheme under a given benefit.
For instance, pension benefit could be availed from subscribing to Employees’ Pension Scheme (EPS), National Pension Scheme (NPS) or any other pension scheme offered by a private player picked up by the government. Likewise, the options being explored for provident fund include the contribution towards EPF, PPF (Public Provident Fund, which is available to all citizen) or GPF (General Provident Fund for government employees) while insurance could be availed by subscribing to Employees’ Deposit Linked Insurance (EDLI) Scheme, Employees’ State Insurance (ESI) scheme or any other scheme run by a private player chosen for the purpose.
While this would give flexibility to subscribers, it is also expected to substantially bring down compliance cost for employers. Employers will need to file only one compliance for one account under the social security code, while at present an employer has to file separate compliances for EPFO, Employees’ State Insurance Corporation (ESIC) and medical insurance for all its employees. It would be a significant departure from the existing scenario where all people in the organised sector are entitled to mandatory deduction from salary towards contribution to provident fund, pension and insurance scheme under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF & MP Act).