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9Th
Aug 2016
 |
| PF (The Total Investment & Insurance Solutions) |
It
should have taken 30 days for Sanjaya Kumar (27) from Odisha to
withdraw his father's provident fund of Rs40,000, the
post-employment, rainy day retirement stash that companies must
compulsorily deduct from salaries.
Instead,
more than 1,825 days have passed since Kumar's father Krushna Chandra
(53) died in 2011. “Please help me withdraw PF money, my mother is
worried about losing it,” said Sanjaya, in a complaint posted on an
online forum.
More
than 10,000 companies -- including 1,195 state-owned -- nationwide
have defaulted on provident-fund payments: 2,200 companies owe at
least Rs 2,200 crore-to the EPFO, the portion of employee salaries
they should have deposited.
The
numbers of defaulting companies and institutions is growing. There
were 10,091 defaulters in 2014-15, rising to 10,932 by December 2015.
Online
consumer forums are flooded with complaints like those of Kumar's, as
hundreds of employees who have quit or retired from a company are
deprived of their provident fund.
“We
get lots of complaints from workers who have been denied their
provident fund and also complaints of collusion between EPFO
officials and employers,” said All-India Trade Union Congress
secretary and EPFO trustee D.L. Sachdev.
A
detailed questionnaire sent on June 29, 2016, to the Central
Provident Fund Commissioner and the Central Vigilance Officer of EPFO
and reminders on August 1 went unanswered.
In
Budget 2015-16, the government decided to tax a part of provident
fund. But widespread nationwide protests -- some violent, especially
in Bangalore -- forced the government to rescind the decision.
The
rainy day solution, hobbled by defaulting companies
Provident
funds are meant to provide financial security to salaried employees,
who must contribute 12 per cent of their monthly salary with the
employer contributing 13.6 per cent.
Companies
or institutions with more than 19 employees deposit the provident
fund of each with the EPFO, which in turn deposits the money in an
employee account that earns 8.8 per cent interest from the
government, which invests the provident fund in government securities
and corporate bonds.
While
employees can withdraw the entire amount after retirement or two
months after resigning from a job, the EPFO allows partial
withdrawals to pay for a home, education, marriage or an illness.
Establishments
that deduct contributions from employees' salaries, but do not
deposit it with EPFO are termed defaulters.
Tamil
Nadu, including Pondicherry, has India's largest number of defaulting
companies (2,644), followed by Maharashtra (1,692) and Kerala,
including Lakshadweep (1,118).
The
Airports Authority of India tops the list of defaulting institutions
with a Rs-192-crore default, followed by HBL GLOBAL, Mumbai, and
Ahluwalia Contracts India Limited, Delhi, with Rs 64.5 crore and 54.5
crore, respectively.
By
region, Thiruvananthapuram leads with 247 defaulters, followed by
Kolkata with 173 and Bhubaneswar with 115.
Companies
that form their own provident-fund trusts for employees are exempt
from signing up with the EPFO. In such cases, trustees are selected
from company workers.
Defaulting
companies must pay a penalty with an interest rate of between 17 per
cent and 37 per cent, depending on the period of default.
EPFO
set for a Rs 33-crore image makeover, but problems are deeper
The
EPFO is set for a Rs 33-crore image makeover, which includes
professional social-media management and advertisements in print and
broadcast media, Mint reported on July 5, 2016.
But
the EPFO'S role as a custodian of employee savings faces deeper
problems: it does not tell employees that companies are defaulting
until they come to settle; cases waiting for settlement are rising;
and corruption with the organisation endures.The Total
Investment & Insurance Solutions
The
number of EPF cases pending settlement in 2015-16 increased 23 per
cent over the previous year. Although 228 police cases were
registered, 14,000 inquiries started against defaulting
establishments and Rs 3,240 crore was recovered in 2014-15 from
defaulters, the EPFO was short of 6,000 employees on March 31, 2015.
Fewer employees affect the organisation's ability to enforce
provident-fund rules.
There
has been a four-fold increase in cases filed by EPFO to prosecute
defaulting employers over the four years ending 2015, from 317 in
2012-13 to 1491 in 2014-15.
As
many as 322 corruption cases were ongoing or concluded against erring
EPFO officials between 2012-February 2015. Since then, corruption
cases have dropped: 167 in 2012, 75 in 2013, 72 in 2014 and 8 till
February 2015.The Total Investment & Insurance
Solutions
One
reason could be that an EPFO executive officer was previously given
charge of an area to ensure employers within that jurisdiction did
not default.The Total Investment & Insurance
Solutions
“Now
notices to defaulters are sent from the Head Office, and there is no
officer who can be held responsible if the company defaults in
payment,” said Vivek Kumar, a former EPFO director of vigilance.
Back
in Hyderabad, the reasoning makes no difference to Sanjaya Kumar.The
Total Investment & Insurance Solutions
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