Your in-hand salary might soon increase, as a labour ministry committee is likely to recommend a lower contribution by the government towards universal social security for all workers. According to reports, the committee, which is working on the contributory ceiling by the government towards universal social security for all workers, might cut provident fund contribution by 2 per cent. Also Read - EPFO Cuts Interest Rate on Deposits to 8.5 Per Cent For 2019-20
Currently, 24 per cent of your salary is deducted towards your provident fund account, which is maintained by Employees’ Provident Fund Organisation (EPFO). Out of this 24 per cent, 12 per cent is contributed by an employer while another 12 per cent is deducted from the employee’s salary. Also Read - Taking Steps For Speedy Redressal of EPFO, ESIC Related Grievances: Santosh Kumar Gangwar
According to reports, it is expected that the committee will finalise its recommendation by the end of August. The proposal aims to increase the coverage of social security scheme to 50 crore from the current coverage of 10 crore people. Also Read - EPFO Likely to Cut Interest Rate by 15-25 Basis Points For This Fiscal: Report
Once the committee finalises its recommendations, the labour ministry will hold consultation with various stakeholders before including it in the social security code.
Generally, employers contribution is included in the total cost to company (CTC) of the employee. If the PF contribution gets reduced then you will have an additional 4 per cent of salary credited in your account.
This will, however, reduce your savings unless you invest the extra money in the other investment products.
The EPFO largely invests your money in fixed income securities. It has recently started investing in ETFs based on Nifty 50, Sensex, Central Public Sector Enterprises (CPSEs) and Bharat 22 indices. It does not invest in shares and equities of individual companies.
“The total amount invested by EPFO in ETFs as on June, 2018 is Rs. 48,946 crore,” Labour Minister Santosh Gangwar earlier said in written reply in the Rajya Sabha.
The EPFO’s apex decision-making body the Central Board of Trustees (CBT) at its 207th meeting held on March 31, 2015 decided to invest only in ETFs in the category of equity and related investments.