The retirement fund body, EPFO has decided to cut the administrative charges through which over 5 lakh employees will together be able to save Rs. 900 crores annually. This decision of cutting down the administrative charges will come into effect on June 1, 2018.
The new administrative charges will 0.50% which were earlier 0.65% of total wage paid by the employers. The decision was made by the EPFO’s trustees meeting held on February 21, 2018. The major reason for taking this decision is to expand the business and high recovery of such fees.
V P Joy, EPFO’s Central Provident Fun Commissioner said, “The lab our ministry has notified the decision to cut administrative charges, which would be effective from June 1, 2018. This will encourage employers to formalize their workers’ employment by bringing them under the ambit of social security schemes run by the EPFO”
Earlier, EPFO had collected Rs. 3,800 crores as the administrative charges from the employers during the last fiscal for running it’s social security schemes. This year, the EPFO estimates that the employers would be able to save a total of Rs. 900 crores annually after the changes.
The EPFO accrued surplus of over Rs. 20,000 crores in the administrative charges account which earns an interest income of over Rs. 1,600 crores per annum.
To explain the rationale behind cutting the administrative charges, V P Joy told that the cut in administrative charges would not affect EPFO because of the increasing numbers of subscribers’ contribution base.
The administrative charges are levied as a proportion of total wages of employees on which employers pay their contribution.