Skip to main content

Labour Min Mulls Pension Scheme for High-Income EPFO Members

By
The labour ministry is considering a pension scheme for high-income working group as the BJP-led NDA government gears up its drive to create a pensioned society.

A senior labour ministry official, who is part of the conceptualisation process, told ET that the initial idea is to roll out the scheme under the retirement fund body Employees Provident Fund Organisation so as to get exempt-exempt-exempt (EEE) status even for pension fund.

This would also make the scheme more attractive than the National Pension System (NPS) that does not enjoy this kind of tax benefit.

Under the EPF & MP Act, out of the employers' 12% contribution to provident fund for its employees, 8.33% goes to the Employee Pension Scheme.While this contribution from employer is mandatory for workers earning up to `. 15000, the employee does not have to cont ribute. The new scheme, if approved, will be available to the high earning EPFO members on a contributory basis.

“We are thinking of coming up with an all-new pension cheme for higher income group of people who do not otherwise save in any pension fund and therefore are often devoid of any retirement benefits after he age of 60 years,“ the official aid on condition of anonymity.

It is not clear if the finance ministry will be open to the idea of another pension scheme. The government has been pushing the NPS to create a pensioned society. In the budget for this year, finance minister Arun Jaitley had made changes in tax treatment of EPF and other retirement savings scheme, reasoning tax rules should be the same for all pension plans.

“I propose to make withdrawal up to 40% of the corpus at the time of retirement tax exempt in the case of NPS,“ he had said while simultaneously proposing tax on withdrawal from PF, which was withdrawn after hue and cry from all sectors, leaving NPS still less attractive than the EPF where withdrawals are not taxable.

According to the official who did not wish to be identified, the new scheme would have an edge over the existing scheme as deposits under the scheme may not attract any tax at any time.

The Economic Times, New Delhi, 11 July 2016

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more