’Significant drop’ achieved in EPF’s actuarial deficit, Centre informs Rajya Sabha

Improvement in the quality of data in respect of members of EPS and amendments have led to the deficit

Updated - March 26, 2023 03:03 am IST

Published - March 25, 2023 08:51 pm IST - Chennai

As for better and efficient management of the corpus, the Employees’ Provident Fund Organisation (EFPO) had appointed fund managers in September 2008. File

As for better and efficient management of the corpus, the Employees’ Provident Fund Organisation (EFPO) had appointed fund managers in September 2008. File | Photo Credit: R. Ashok

A “significant drop” has been achieved in the actuarial deficit of the Employees’ Pension Fund (EPF), according to the Central government.

This has become possible thanks to improvement in the quality of data in respect of members of the Employees’ Pension Scheme (EPS), 1995 and amendments carried out based on recommendations of the actuarial valuation report, and suggestions of the Union Finance Ministry while agreeing to the minimum pension proposal. Since September 1, 2014 a minimum pension of  ₹1,000/- per month under the EPS is being provided through budgetary support.

This was stated in an action taken report (ATR) tabled a few days ago on the floor of the Rajya Sabha, along with the reply of Union Minister of State for Labour and Employment, Rameswar Teli. It was in response to the Congress leader  Digvijaya Singh’s question on the status of implementation of recommendations of the 147th report of the Committee on Petitions (also called the report of the Bhagat Singh Koshyari Committee). The Committee submitted its recommendations to the Upper House in September 2013 and an ATR was sent to the Rajya Sabha Secretariat in May 2014.

Among the amendments were the calculation of pensionable salary on the basis of 60 months’ average instead of 12 months’ average, and the determination of eligible service on the basis of contributory service instead of simple length of service.  As suggested by the Committee on Petitions, special efforts were made to collect information on members, and the valuation for 2011-12, 2012-13 and 2013-14 was carried out with the data of almost 60% of active contributing members and 100% of the pensioners, resulting in better quality and reliability of the valuation exercise. The valuation of EPF was completed till 2019.

As regards the suggestion for conducting valuation every three years and replacing the EPS with a Provident Fund-cum-Pension Annuity Scheme with mandatory annuitisation, the ATR mentioned that “no consensus could emerge” on the proposal for an annuity-based scheme during two meetings of the Central Board of Trustees (CBT) of the EPF held in September 2010 (the 190th meeting) and January 2014 (the 202nd meeting). Besides, it was felt that the annual valuation should continue.

On the recommendation for providing price rise neutralisation in the pension amount to offset inflation, the government took the stand that it had not been “not found feasible” to provide for increase in pension by neutralising the effect of inflation, as the EPS was a funded scheme with features of defined benefits and defined contribution.

As for better and efficient management of the corpus, the Employees’ Provident Fund Organisation (EFPO) had appointed fund managers in September 2008. The investments were being carried out as per the pattern of investment prescribed by the Union Finance Ministry, notified by the Union Ministry of Labour and Employment, and in tune with the guidelines laid down by the EPF’s CBT.

The Union Minister also informed the House that the recommendations of the panel were considered by the government and, “to the extent of administrative and financial feasibility”, they were implemented. 

To another question on inoperative EPF accounts, Mr. Teli replied that as on March 31, 2022 the total amount lying in inoperative accounts was ₹4,962.70 crore.  All such accounts had “definite claimants” and whenever a claim was preferred to the EPFO, it was “settled after due scrutiny”.

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