Option for reduction of EPF contribution - Dangerous

Seen in newspapers, HR circles that an option will be provided to employee to reduce his contribution, but Employer share will remain same. Why this? It is claimed more take home compensation for employee, consequently increases his purchasing power! Funny!! at the same time it is dangerous too. it cannot be denied that EPF is a social welfare legislation to provide help /rescue to employees post retirement by way of Lumpsum amount of what he contributed with interest and pension though meager.
It seems Govt. is interested to reduce its interest burden on EPF contribution amount while retaining employers' as it will not have interest burden except to 3.67%. The increase in purchase power with this saving etc., are not worthy saying, while you are killing saving habit of people by reduction in returns on savings and unsecured future of deposits without insurance guarantee.
Requesting local circles to oppose this move, as it is detrimental to employees' post retiral life as we do not have any social net work protection after retirement. more  

View all 9 comments Below 9 comments
It may be useful to refer to the basic idea and logic of fixing percentage and employer contribution. If option is given the idea of secure old age may at risk. Basically they are compulsory contributions. more  
"an option will be provided to employee to reduce his contribution" - If it is an option; those who wants to save money can go for it. Govt is making is optional only. Those who wants to save more are welcome to do so. What's wrong in it? more  
It will definitely effect old age requirement/spending/pension. more  
Jumping into any conclusion of good or bad is equally dangerous.
We need to carefully calculate income both ways and decide. Also the type and time of requirement is equally important. You will certainly not continue with a high interest loan EMI and wait for pension.
EPS can't always be attractive and EPFO tactfully calculate the pension.
Though website/blogs says pension is calculated as per last 5 years average that's completely wrong. It is calculated separately upto 2014 (max 6500) and after 2014 (max 15000)- mind it as happened/clarified to me by EPFO.
Also one should know the reduction in pension after death which is unchanged once you invest in other scheme. That's the WORST in EPS and calculating only pension amount as forever interest is wrong. more  
Look at the other picture, govt. provides various options to withdraw money prematurely, ask the stastics 90% of the people Avail this, many of them leave the job just because they have to clear a hand loan of twenty or thirty thousand , so if the govt. wants citizen to save at 24 % till 60 years then no premature withdrawals should be allowed or collect 7 % from employer and 1.31 % from employee and give 50 % of the last drawn salary as pension. more  
Post a Comment

Related Posts

    • EPF Online transfer claim

      I had requested online for Claim Transfer and received message from EPFO saying its approved and amount will be credited soon but even after 40 Days , it's not transferred to current PF account.My ...

      By Gourav Anand
    • Shared this from Tax, Investments and Retirement

      most of the middle class people retired from private sector have been getting a megre EPS pension anything between Rs.1000 & 2000 per month. This is without any increase for more than last 20 y...

      By Nagendra Rao Galla
    • Covid19 relief measures attached

      Government to pay the EPF contribution for the next 3 months for establishments with upto 100 employees 75% or 3 month's non-refundable advance allowed from EPFs

      By Satvik Singh
    • EPS pension

      how much pension I could get under eps-95 scheme per month if I volunteer retire at the age of 54year ,my joing date of service is 1990 January.and length of service is 30.5 years with a basic sale...

    • PPF account extention

      Can anybody guide me about the procedure of SBI PPF account extension from remote location (you are not in the city where the PPF account is running). Visiting the place just because of physic...

      By Shibdas Mallick
    • EPF interest is always lower than the declared percentage- check it

      Have you ever checked your EPF interest amount credited with calculation? There are thousands of blogs regarding declared interest rate etc but it never gives a proper calculation procedure to chec...

      By Shibdas Mallick
    • PF withdrawal

      Chances are low now for fraud as you will be linking Aadhar, PAN , bank account etc., to the UAN. Probably it is wise to withdraw at the end of three years as it can fetch fairly good interest ti...

    • Interest on EPF

      Its going to be 3 years since you left. You have't withdrawn so far, must be some plan. f you have any plan to join some service, its ok, otherwise there is no point of retaining the balance in fun...

      By Vijay Agarwal
    • Duration of interest on EPF balance after quitting job .

      I resigned from my company at the age of 48 yrs after 28 years (May1989 to Jan 2017) of service, hence contribution to my epf account stopped. Pl inform that how long will the balance in my e...

      By Sanjay Tikoo
    • EPS certificate

      Friends,I need suggestion regarding my EPS certificate received from EPFO. I have worked in a trust for 2 years 10 months and after that joined another company which does not contribute to EPS.

      By Anuradha Bhatta
Enter your email & mobile number and we will send you the instructions

Note - The email can sometime gets delivered to the spam folder, so the instruction will be send to your mobile as well

Please select a Circle that you want people to invite to.
Invite to
(Maximum 500 email ids allowed.)