EXAMPLE-3: Date of Joining : 15.01.1996;

Date of Exit : 01.01.2005; Date of death:01.08.2005 Salary Rs.5000/-

Past Service Pension = Rs.0/-

Pensionable Service -Pension = Rs.5000X9/70 = Rs.642/-.

These are the some of the calculations for various pensions detailed in the Employees Pension scheme.

As discussed above the Employees' Pension Scheme came into being with effect from 16.11.95. This pension scheme is introduced in place of existing Family Pension Scheme which became operational since 1971. The Employees’ Pension Scheme provides for compulsory coverage of existing members of Family Pension Scheme and for new entrants to the Employees' Provident Fund after 16.11.95. It is also applicable to those who ceases to be member of the Family Pension Scheme 1971 between 1.4.93 to 15.11.95 and who opt to join the scheme provided they deposit in pension fund the withdrawal benefits received by them if any with interest. The another provision in the pension scheme is it enables the members of the Employees' Provident Fund who did not join the Family Pension Scheme 1971 can now opt to join the pension scheme after depositing the past period contributions with interest within six months.

The members of the Employees' Pension Scheme do not contribute anything from their wages or salary towards this pension scheme. However, 8.33% of the Employers’ share of Provident Fund contribution will be diverted to the Pension fund and the remaining percentage of Employer contribution i.e. 3.67 and 1.67 in 175 and 5 industries respectively as well as entire Employees' Share remains in the Provident Fund. Moreover, the entire past Employees' Share up to 15.11.95 will also remain in the PF A/c. The Government of India makes a contribution equivalent to 1 1/6% of the wages.

The administration of pension scheme is taken care by Employees’ Provident Fund Organisation and the administration set-up of the pension scheme as well as Provident Fund scheme is discussed elsewhere in the following chapters. With the introduction of the Employees' Pension Scheme the objectives of the social security are expected to be achieved to a great extent at least to the organised sector in the country where the EPF & MP Act applies. This legislation has made provision for the Old age income and survivor benefits. As discussed in the earlier Chapters, the schemes provide for income maintenance by guaranteeing a minimum continuous income in event of retirement, destitutions, widowhood etc. Further the Employees pension scheme is a long awaited scheme for the Government of India was unable to enact a law of pensions for Industrial workers as per the recommendations of the Rege committee in the initial years of Independence itself due to its economic impact on the government and on the Industry. Now that a number of countries world over have pension systems for their work force and there has been a constant demand for a third benefit from the Industrial workers in India, the Government of India has come out with this scheme. The scheme extends a helping hand to the workers of small means in the

evening years of their life after retirement. Senior citizens of the country need not work again to earn their living once they had worked during their youthful days in nation building. The pensions scheme also makes an old person live in dignity without any dependence on the economic support extended by his /her sons and daughters or by relations or by the charity organisations. Neither is he required to worry about the vicissitudes of the money market during his old age to invest whatever little money he saves during his lifetime in the defined contribution system or in his personal savings. In many cases, it is not possible to invest the lump sum that is paid at the time of retirement of the worker who is particularly in the very low pay brackets.

Summary and Conclusions

Both the Employees Provident Fund Scheme and the Employees pension Scheme are beneficial legislations. While Employees Provident Fund Scheme provides an accumulation for the Old and for the survivors to enable them to meet immediate cash requirements at the Old Age, the Pension scheme guarantees continuous post retirement income to the workers and to their dependents in event of the death of the worker thereby protecting him from the contingent poverty. The pension is however limited to the benefit formula linked to insurable earnings or pensionable salary on which contributions paid. This some time may be very small amount in comparison with the last salary drawn as the contributions were collected on ceiling of Rs6500/- P.M. The only implication is in case of workers earning wages above Rs.6500/- P.M. and if their employers are not paying contributions on entire salary, the pension is calculated on the pensionable salary on which contributions have been paid. This will not go with the principles of income maintenance in event of retirement. Nor does it guarantee a decent living after retirement if there are no other savings by the worker. However, the Provident Fund Scheme is a defined contributions scheme where as the Pension Scheme is a Defined Benefit Scheme. These schemes enable the aged persons who were in low salary brackets live in dignity. The schemes are designed to attack contingent poverty among the vulnerable groups within the working class. The contingencies like old age, death of the workers, widowhood, closure of establishments and disablement are taken care of by these legislations. The contingencies like Medical requirements and sick ness are under other legislations like Employees State Insurance Act 1948.

CHAPTER IV

WORKING OF EMPLOYEES’ PROVIDENT FUNDS & PENSION SCHEMES ADMINISTRATIVE ARRANGEMENTS

In this chapter, we discuss the administrative arrangements for delivery of benefits that are guaranteed by the Employees Provident Funds and miscellaneous provisions Act 1952 and schemes framed there under.

The organisational set up suggested by the Employees’ Provident Fund Act, 1952, Scheme 1952 takes care of the following activities:

$ Coverage and registration

$ Collection and recording of contributions $ Compliance and Enforcement

$ Investment of funds

$ Award and payment of benefits

The organizational arrangements and workforce deployed for these activities are discussed in the paragraphs of relevant chapters hereafter.

All these five types of activities complete the process of implementation of Provident Fund and Pension legislations right from bringing the beneficiary under the purview of the Act and giving benefits to him.

The administration of the provident funds and pension scheme is entrusted to an autonomous and statutory body called Central Board of Trustees, Employees Provident Fund, which came into existence in October 1952. In the day-to-day usage the organisational set up is called the Employees’ Provident Fund Organisation.

The Central Board of Trustees is a tripartite body and is a body corporate having perpetual succession and common seal and can sue and be sued. The composition of the board has the representation of all concerned, like Employer, Employees and Government. While being under the administrative control of the Union Ministry of Labour, the Central Board enjoys autonomy. But the policies of the Central Board are always in conformity with the general policy goals of the State. The Central Board of Trustees is therefore entrusted with the duties and responsibilities of administering the schemes of Provident Fund & Pension.