Self Employed may be Brought Under Employees’ Provident Fund Organization’s Social Security Net

The government wants to make it easier for self-employed people to join the Employees’ Provident Fund Organization by allowing them to contribute 10% of their monthly salary to the fund.

“The idea, which is being debated by the EPFO ad-hoc committee, is projected to help 15 million self-employed people in the country,” a source close to the discussions told ET.

EPFO’s central board of trustees will make the decision on the proposal.

According to the source, the government may create a new plan or add a provision in the existing EPFO programme that permits self-employed workers to receive provident fund and pension benefits.

However, there may be a limit on how much you can contribute based on your income. Wages for provident fund and pension calculations are now capped at $15,000 per month under the EPFO plan.

Furthermore, self-employed contributions may not be included in the present Act’s corpus, which has been established over decades by employee-employer contributions.

Even the returns on such deposits made by individuals or the self-employed may differ from the EPFO’s current investments. For 2021-22, the EPFO has set an interest rate of 8.1 percent.

The Social Security Code gives the government the authority to create a new system to offer social security to unorganized workers, including self-employed people, and to assign its administration to the EPFO.

If the Code’s implementation is delayed, the government may consider amending the EPF Act of 1952, which requires both the employee and the employer to contribute 12 percent to the beneficiary’s provident fund account.

EPFO, the government-run retirement fund, has over 60 million members and manages a fund of over Rs. 12 lakh crore. EPFO members are eligible for provident fund benefits through the EPF scheme, pension benefits through the EPS-95 programme, and insurance benefits through the Employees’ Deposit Linked Insurance Scheme.

Source: The Economic Times