EPF plans to be opened to private sector employees and self employed
- RUDRA PANGENI
- Amendment to employees provident fund act
KATHMANDU, March 25: The government is making amendment to the Employees Provident Fund Act 1952 to increase participation of employees of the private sector as well as self-employed professionals in its provident fund scheme.
The amendment bill registered at the Parliament Secretariat two weeks ago after cabinet approval has also omitted existing provision which makes only the private firms having a minimum of 10 employees eligible for joining a plan. If the bill is endorsed by the parliament, even a single employee of any firm or self-employed professionals will be eligible to join EPF’s provident fund plans or other social security schemes.
The amendment bill registered at the Parliament Secretariat two weeks ago after cabinet approval has also omitted existing provision which makes only the private firms having a minimum of 10 employees eligible for joining a plan. If the bill is endorsed by the parliament, even a single employee of any firm or self-employed professionals will be eligible to join EPF’s provident fund plans or other social security schemes.
As per the draft bill, private firms will have to deduct 10 percent from their staffers’ salary, add equal amount from their side and deposit the amount at EPF.
EPF, which has only around 50,000 depositors from the private sector, expects to see massive surge in the number of depositors from private sector once the bill is endorsed by the parliament. As per the statistics of mid-July last year, EPF is sitting on a cash pile of Rs 163 billion.
Rajendra Kafle, spokesperson of EPF, said registered depositors have to deposit the amount every month and they can receive accumulated deposits and an additional amount of interest and dividend earned by the fund every year while taking retirement.
The bill has also added a new category of eligible depositors called ‘self-employed’. It defines ‘self-employed’ as earners from private enterprises or self-employed people like engineers, doctors, lawyers, auditors as well as individual migrant workers, employees of permanent or contract nature with private sector companies/firms, household workers, and informal sector laborers or laborers of tea estate.
Once the bill is endorsed by the parliament, the government needs to make amendment to EPF Rules accordingly.
“Depositors also can participate in existing plans like borrowing of up to 90 percent of their deposit amounts and benefit from educational loan and housing loan, among others,” said Kafle.
Likewise, depositors can also get medical facility of up to Rs 15,000 for minor medical treatment and Rs 35,000 for serious treatment once a year. Similarly, next of kin of depositors will get Rs 100,000 as accidental compensation scheme in the event of the death of depositors.
Kafle also said that they have proposed to the government to endorse health insurance scheme for its depositors as part of social security schemes of the government.
More than Rs 4 billion has been collected in the Social Security Fund so far. All employees, working with both public and private sector, have been contributing one percent of their income in the fund since 2009/10.
EPF CAN ALSO BE EQUITY INVESTOR
EPF, which has been lending to different development projects, can be equity investor in infrastructure projects once the bill is endorsed.
“As EPF has deposits of long-term nature, it can invest in long-term infrastructure projects,” Kafle said.
“As EPF has deposits of long-term nature, it can invest in long-term infrastructure projects,” Kafle said.
In the absence of long-term lenders, hydropower developers are finding it difficult to finance their projects by banks and financial institutions which have short-term deposits.
The bill also allows EPF to become equity investor in housing, hydropower and any other infrastructure projects prioritized by the government.
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