New Delhi: Many employee associations have long demanded an increase in the current Employees’ Provident Fund Organisation’s (EPFO) wage ceiling of Rs 15,000 which would help bring more employees under the EPF umbrella. The Supreme Court earlier this week directed the government to consider taking a decision within four months on the issue of revision of the existing basic salary ceiling of Rs 15,000 for enrolment under the EPF scheme.
A Bench of Justices J.K. Maheshwari and A. S. Chandurkar passed the order on a plea filed by activist Naveen Prakash Nautiyal who claimed that the Employees Provident Fund Organisation currently excludes anyone earning more than Rs 15,000 per month from coverage. The petition said that employees who earn above the ceiling are automatically excluded from the scheme even though their income levels may still qualify for social security coverage.
What is EPFO’s wage ceiling?
The pay ceiling is the statutory maximum limit for mandatory contributions to Employees’ Provident Fund (EPF), Employees’ Pension Scheme (EPS) and Employees’ Deposit Linked Insurance Scheme (EDLI). The current EPF wage ceiling is Rs 15,000. EPF and EDLI contributions are not mandatory for employees earning more than Rs 15,000. However, they can join EPF and ELDI schemes if the employer approves.
What is EDLI scheme?
The EPFO offers its subscribers three savings schemes, namely EPF, EPS and EDLI. While the first two are savings schemes, the Employee’s Deposit Linked Insurance Scheme (EDLI) is an insurance scheme that offers life insurance benefits to EPF members. It covers all employees of factories and establishments.
Launched in 1976, the EDLI scheme is available to all employees who are provided with EPF by employers. All the employees who subscribe to the EPF scheme automatically get enrolled in the EDLI scheme. As an employee, one is not required to contribute but only the employer has to pay. Employers contribute 0.5 percent of wages. Claims are processed within 20 days, ensuring that the family receives quick financial support.
Who receives EDLI scheme benefit?
The aim of the EDLI Scheme is to provide life insurance benefits to the employees of the establishments. An assurance benefit is provided to eligible family members to provide financial support in the event of an employee’s unfortunate death while in service. If the employee dies while on service, the nominee is entitled to a minimum of Rs 2.5 lakh and a maximum of Rs 7 lakh, depending on the employee’s income and EPF balance.
The EDLI claim is only admissible if the deceased person was in active service at the time of death.
The claim amount is linked to the average of the provident fund account balance of an employee and is payable to the employee’s nominee.
Benefits of the EDLI scheme
The EDLI scheme offers an assurance benefit paid to nominees/legal heirs on death.
The maximum assured benefit is up to Rs 7 lakh paid to the nominee of EPF member, if death occurs while in service.
The minimum sum assured is Rs 2.5 lakh to member beneficiaries.
Employees with basic salary under Rs 15,000 covered
EDLI applies to all employees with a basic salary under Rs 15,000 per month. If the basic salary of the employee is above Rs 15,000 per month then the maximum benefit will be Rs 7 lakh.
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