Pension for private sector employees too! Govt to soon make necessary changes

Pension for private sector employees too! Govt to soon make necessary changes

Reports coming in suggest that the central government may bring in measures which might come as a big relief to salaried workers. According to certain reports, it might soon be necessary to enrol in a pension scheme just like the EPF. In other words, for such a pension scheme, it will be necessary to have an amount deducted from the salary. However, the employee will get to decide the amount of deduction.

This move is set to benefit lakhs of salaried workers, according to Times of India. Rajiv Kumar, Finance Secretary, told the daily that a system is being put in place for the scheme, and a minimum of Rs 100 can be deducted, while a similar amount can also be contributed by the company.

He further stated that the youth today will be needing money when they grow old.

Workers are often worried about their PF account. In fact, most employees in the private sector are unaware of pension under the EPF scheme. Experts claim that the amount deducted from the employee’s salary has two destinations. First is the Employees’ Provident Fund or EPF. The second is the Employees’ Pension Scheme or EPS. 12% of the employee’s salary is deducted and deposited into the EPF account. Apart from this, 3.67% is put into the EPF account from the employer company while the remaining 8.33% goes into the EPS fund.

The amount in the EPF account can be withdrawn by the employee at any time. However, rules regarding withdrawal of pension amount are strict. If one has been working for more than 6 months but less than 9 years and 6 months, then by submitting forms 19 and 10c one can withdraw the amount in the PF account as well as the pension. But for this, one can only apply manually at the PF office. Online process of withdrawing pension has not been started yet. One can fill up a form and then submit it at the EPFO office only through the employer. 

In order to strengthen the Pension Fund Regulatory and Development Authority (PFRDA), Finance Minister Nirmala Sitharaman proposed to bring certain amendments to the extant PFRDA Act. She also proposed to set up pension trusts by giving exemption to employees. 

While presenting the Union Budget on Saturday, Nirmala Sitharaman said,”The regulatory role of PFRDA needs to be strengthened. Necessary amendments will be made in the PFRDA law. With this, the NPS trust for government employees will be separated from PFRDA.”

She further stated that with this not only government employees but even employees in other sectors can set up pension trusts. “I believe that this will motivate citizens to plan for old age,” she said. This will also increase ‘mobility’ during the job period, she further stated. 

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