Employees may get to choose between EPF and NPS

A proposal was put forth before the Cabinet sometime last year, as part of a bill to make amendments to the EPF and Miscellaneous Provisions Act, 1952.

Workers under a certain threshold of monthly income may soon be able to completely waive off EPF contributions, if the suggestions are taken and implemented.

Many employers reduce their PF liability through various means like clubbing of wages, separation of basic wage into various allowance headings, etc. It is for this reason that another suggestion put forth is to redefine the term wages with respect to EPF and NPS so that the employee gets a larger sum.

Currently, 3.67% of the employee’s contribution goes towards EPF (Employee’s Provident Fund), 8.33% goes towards Employee’s Pension Scheme (EPS), and 0.5% goes towards the Employee’s Deposit Linked Insurance (EDLI) scheme.

The main suggestion was to allow employees to have the option to choose whether their contribution goes towards EPF or NPS. There are some arguments against this, as the NPS isn’t a social security scheme, it’s a saving scheme.