The central govt. is mulling whether or not to allow self-employed individuals to enrol under the
Employees’ Provident Fund Organization (EPFO) by contributing 10% of their income to the
provident fund body every month. The proposal to allow self-employed people to enrol with the
EPFO is being deliberated upon by the ad-hoc committee planning EPFO expansion, if the
decision is to allow self-employed individuals to be covered by EPF then it is said to benefit
more than 1.5 crore self-employed people in India.
The final decision on this will be made by the EPFO’s Central Board of Trustees (CBT). EPFO
officials with information regarding the topic have said that the government may create a new
scheme or add a provision in the existing EPFO scheme which will allow self-employed
individuals to avail EPFO benefits such as provident & pension funds. The decision to be made
on the rate of contribution is yet to be discussed but sources say it could be subject to an income
ceiling. As per the current EPFO scheme, monthly salary for computation of provident &
pension funds are subject to a ceiling of ₹15,000.
The contributions made self-employed individuals may not be a part of the corpus which was
built over several decades under the existing Act via employer-employee contributions. The
EPFO had announced an interest rate of 8.1% for 2021-22 but the interest on returns for deposits
by self-employed individuals may be different from the returns given on EPFO investments. The
power of Social Security Code allows the government to frame a new scheme to provide social
security to an unorganised worker which will include self-employed persons & the
administration of such a scheme will be entrusted to the EPFO.
However, if the implementation of the Code is delayed, the government may even consider
tweaking the EPF Act, 1952, which mandates an employee-employer relationship wherein both
employee and the employer contribute 12% each to the provident fund account of the
beneficiary. Retirement fund body EPFO has around 60 million subscribers and manages a
corpus of over ₹12 lakh crore. EPFO beneficiaries are entitled to provident fund benefits under
the EPF scheme, pension benefits under the EPS-95 scheme, and the insurance benefits under the
Employees’ Deposit Linked Insurance Scheme.