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Employees' Deposit Linked Insurance Scheme, 1976

Updated on:13th Aug, 2024
Para Description  

In this Scheme, unless the context otherwise requires,—

(a) “Act” means the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952);

(b) “assurance benefit” means a payment linked to the average balance in the Provident Fund Account of an employee, payable to a person belonging to his family or otherwise entitled to it in the event of death of the employee while being a member of the Fund;

(c) all other words and expressions used herein but not defined shall have the meaning respectively assigned to them in the Act or the Employees’ Provident Funds Scheme, 1952;

 

This Scheme shall be administered by the Central Board constituted under section 5A of the Act.

 

The Regional Committee set up under paragraph 4 of the Employees’ Provident Funds Scheme, 1952, shall advise the Central Board on such matters, in relation to the administration of this Scheme, as the Central Board may refer to it from time to time and in particular, on—

(a) progress of recovery of contributions, under this Scheme, both from factories and establishments exempted under section 17 of the Act and other factories and establishments covered under the Act; and

(b) expeditious disposal of prosecutions.

 

(1) The Central Board may, by a resolution, empower its Chairman or the Commissioner or both to sanction expenditure, subject to such limits as may be specified in the resolution, on contingencies, supplies and purchases of articles required for administering the Insurance Fund subject to financial provision in the Budget, where such expenditure is beyond the limits upto which the Chairman or the Commissioner is authorised to sanction expenditure on any single item.

(2) The Central Board may also by a resolution empower its Chairman or the Commissioner or both, to appoint such officers and employees other than those mentioned in sub-sections (2) and (3) of section 5D of the Act, as the Chairman or the Commissioner may consider necessary for the efficient administration of this Scheme.

(3) All sanctions of expenditure made by the Chairman or Commissioner in pursuance of sub-paragraph (1) shall be reported to the Central Board as soon as possible after the sanction of the expenditure.

 

The Commissioner may, without reference to the Central Board, sanction expenditure on contingencies. supplies and services and purchase of articles required for administering the Insurance Fund, subject to financial provision in the budget and subject to the limits upto which he may be authorised to sanction expenditure on any single item from time to time by the Central Board.

 

(1) The contribution by the employer shall be remitted by him together with administrative charges at such rate as the Central Government may fix from time to time under sub-section (4) of section 6C of the Act (at present the rate of contribution is @ 0.05% of Insurance Fund and its administrative charges @ 01.01%) to be deposited within fifteen days of the close of every month by a separate bank draft or cheque or by remittance in cash in such manner as may be specified in this behalf by the Commissioner. The cost of remittance, if any, shall borne by the employer.

(2) It shall be the responsibility of the employer to pay the contribution payable by himself in respect of the employees directly employed by him and also in respect of the employees employed by or through a contractor.

(3) The Central Government shall credit its contribution to the Insurance Fund as soon as possible after the close of every financial year

(4) The Commissioner shall deposit the bank draft or cheque received from the employers in the State Bank of India or any Bank specified in the First Schedule to the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970(5 of 1970).

 

The Central Board may reduce or waive the damages levied under section 14-B of the Act in relation to an establishment specified in the second proviso to section 14B, subject to the following terms and conditions, namely:—

(a) in case of a change of management including transfer of the undertaking to workers’ co-operative and in case of merger or amalgamation of the sick industrial company with any other industrial company, complete waiver of damages may be allowed;

(b) in cases, where the Board for Industrial and Financial Reconstruction, for reasons to be recorded in its scheme, in this behalf recommends waiver of damages up to 100 per cent may be allowed;

(c) in other cases, depending on merits, reduction of damages up to 50 per cent may be allowed.

 

 

Notwithstanding any contract to the contrary, the employer shall not be entitled to deduct the employer’s contribution payable by him under this Scheme from the wages of the employees or to recover it from them in any other manner.

 

Every employer shall, whenever the Commissioner or any other officer authorised by him in this behalf or an inspector so requires, produce before him the records and other registers then in his possession, for inspection.

 

The Commissioner shall supply to employer free of charge, on demand, forms referred to in this Scheme to the extent absolutely necessary.

 

The contributions received from the employers and the Central Government under sub-section (4) of section 6C of the Act shall be credited to a separate account called The Insurance Fund Central Administration Account” and all expenses in connection with the administration of this scheme, other than the cost of benefits provided by or under this Scheme, shall be met out of this account.

 

The amount received as the employer’s contribution and also the Central Government’s contribution to the Insurance Fund under sub-sections (2) and (3) of section 6C shall be credited to an account called the “Deposit-Linked Insurance Fund Account”, and all expenses towards the cost of any benefits provided by or under the Scheme shall be met out of this account.

 

All interest, rent and other income realised and net profits or losses, if any, from the sale or investments, not including therein the transaction of the Insurance Fund Central Administration Account shall be credited or debited as the case may be to the Insurance Fund.

 

All expenses relating to the administration of this Scheme including the expenses incurred on Regional Committee shall be met from the "Insurance Fund Central Administration Account”.

 

The Central Board shall maintain the accounts of its income and expenditure including its administrative account in Form 1 and Form 2 and the balance-sheet in Form 3. The accounts shall be prepared for the financial year and the books shall be balanced on the thirty-first March each year.

 

 

(1) The accounts of the Insurance Fund, including the Insurance Fund Central Administration Account, shall be audited in accordance with the instructions issued by the Central Government in consultation with the Comptroller and Auditor General of India.

(2) The charges on account of audit shall be paid out of the Insurance Fund Central Administration Account.

 

(1) The Commissioner shall place before the Central Board each year before the first fortnight of February a budget showing separately the probable receipts from the contributions and from the levy of administrative charges and the expenditure which is proposed to be incurred during the following financial year. The budget as approved by the Central Board shall be submitted for sanction to the Central Government within a month of its being placed before the Central Board.

(2) The Central Government may make such modification in the budget as it considers desirable before sanctioning it.

(3) The Commissioner may at any time during the year make budgetary, reappropriation of funds sanctioned in the budget by the Central Government provided that—

(i) the total amount sanctioned in the budget by the Central Government is not exceeded;

(ii) it is made only for meeting such expenses of administration as are to be met from the Insurance Fund Central Administration Account in accordance with paragraph 18; and

(iii) every reappropriation so made shall be reported by him to the Central Board at its next meeting.

(4) The Commissioner shall place before the Central Board a supplementary budget for a financial year, giving detailed estimates and reasons of inescapable expenditure which is likely to be incurred during the year for which no provision has been made in the sanctioned budget and which cannot be covered under the provisions of sub-paragraph (3). The supplementary budget as approved by the Central Board shall be submitted for sanction to the Central Government within a month of its being placed before the Central Board.

(5) Any expenditure incurred by the Commissioner over and above the sanctioned budget of the financial year and not covered under the provisions of sub-paragraphs (3) and (4) shall be reported to the Central Board at the earliest practicable moment after the excess is established for its consideration and for obtaining sanction of the Central Government.

 

(1) The nomination made by an employee under the Employees’ Provident Funds Scheme, 1952 or under the provident fund exempted under section 17 of the Act, as the case may be shall be treated as nominations under this Scheme and the assurance amount shall become payable to such nominee or nominees.

(2) If no nomination subsists or if the nomination relates only to part of the amount standing to his credit in the Fund 1 or of a provident fund exempted under section 17 of the Act, as the case may be] the whole amount or the part thereof to which the nomination does not relate, as the case may be, shall become payable to the members of his family in equal shares:

Provided that no share shall be payable to—

(a) sons who have attained majority;

(b) sons of a deceased son who have attained majority;

(c) married daughters whose husbands are alive;

(d) married daughters of a deceased son whose husbands are alive; if there is any member of the family other than those specified in clauses (a), (b), (c) and (d):

Provided further that the widow or widows, and the child or children of a deceased son shall receive between them in equal parts only the share which that son would have received if he had survived the employee and had not attained the age of majority at the time of his death.

(3) In any case to which the provisions of sub-paragraphs (1) and (2) do not apply the whole amount shall be payable to the person legally entitled to it.

(4) If a person who is eligible to receive Assurance Scheme benefit of the deceased member in terms of sub-paragraphs (1), (2) or (3) is charged with the offence of murdering the member or for abetting in the commission of such an offence, his claim to receive assurance benefit shall remain suspended till the conclusion of the criminal proceedings instituted against him. If on the conclusion of the criminal proceedings, the person concerned is—

(a) convicted for the murder or abetting in the murder of the member, he shall be debarred from receiving his share of deposit linked assurance benefit which shall be payable to any other eligible member of the family, or

(b) acquitted of the charge of murdering or abetting in the murder of the member, his share shall be payable to him.

          Explanation—For the purpose of this paragraph an employee’s posthumous child, if born alive, shall be treated in the same way as a surviving child born before his death.

 

 

 

The Commissioner may with the approval of the Central Board specify the registers and records to be maintained in respect of the employees, the form or design of any identity card, token or disc for the purpose of identifying any employee or his nominee or nominees or a member of his family entitled to receive the benefit under this Scheme and such other formalities as have to be completed in connection with the payment of the said benefit, subject to such periodical verification as may be considered necessary.

 

The Central Board shall approve before the tenth of December and submit to the Central Government before the twentieth of December each year, a report on the working of the Scheme during the previous financial year.

 



 [xxx]



 

(1) (i) A Commissioner may by order and subject to such conditions as may be specified in the order exempt from the operation of all or any of the provisions of this Scheme an employee to whom the Scheme applies on receipt of application from such an employee:

Provided that such an employee is without making any separate contribution or payment of premium, in enjoyment of benefits in the nature of life assurance, whether linked to their deposits in provident funds or not, according to the rules of the factory or other establishment and such benefits are more favourable than the benefits provided under this Scheme.

(ii) Where an employee is exempted, as aforesaid, the employer shall in respect of such employee maintain such accounts, submit such returns, provide such facilities for inspection as the Commissioner may direct and pay such inspection charges and make such investments as the Central Government may direct.

(2) An employee exempted under sub-paragraph (1) may, by an application to the Commissioner, make a request that the benefits of the Scheme be extended to him.

(3) No employee shall be granted exemption or permitted to apply out of exemption more than once on each account.

(4) (i) The Central Government may by order and subject to such conditions as may be specified in the order exempt from the operation of all or any of the provisions of this Scheme any class of employees to whom this Scheme applies, on receipt of an application therefor in such form as the1-a [" Cenral Provident fund  Commissioner"] may specify:

Inserted - i) The Central Government may by order and subject to such conditions as may be specified in the order exempt from the operation of all or any of the provisions of this Scheme any class of employees to whom this Scheme applies, on receipt of an application therefor in such form as the ["or Additional Central Provident Commissioner (Head Quarters) or Additional Central Provident Fund Commissioner"] may specify:

1-a Inserted - Vide notification G.S.R. 299(E) dated 28 Apr 2021

Provided that such class of employees is, without making any separate contribution or payment of premium, in enjoyment of benefits in the nature of life assurance, whether linked to their deposits in provident fund or not, according to the rules of the factory or other establishment and such benefits are more favourable than the benefits provided under this Scheme.

(ii) Where any class of employees is exempted as aforesaid, the employer shall in respect of such class of employees maintain such accounts, submit such returns, provide such facilities for inspection, pay such inspection charges and make investments in such manner as the Central Government may direct.

(5) A class of employees exempted under sub-paragraph (4) or the majority of employees constituting such class may, by an application to the Commissioner, make a request that the benefits of this Scheme be extended to them.

(6) No class of employees or the majority of employees constituting such class shall be granted exemption or permitted to apply out of exemption more than once on each account.

(7) Notwithstanding anything contained in this Scheme the Commissioner may in relation to a factory or other establishment in respect of which an application for exemption under section 17(2A) of the Act has been received, relax, pending the disposal of the application, the provisions of this Scheme in such manner as he may direct.

         28-a  {(8)  Every employer shall send to the commissioner an electronic format of the returns referred to in clause (ii) of sub –pharagraph (1)and clause (ii)of sub-pharagraph (4) in such form manner as may be specified by the commissioner”.}


28-a insterted by S.o. 1810 (E) dated 05/08/2011 w.e.f.05/08/2011

 

(1) Subject to the provisions of the Act and of this Scheme, the Insurance Fund, not including therein the Insurance Fund Central Administration Account, shall not, except with the previous sanction of the Central Board, be expended for any purpose other than the payment of the benefits in accordance with the provisions of this Scheme.

(2) The Insurance Fund shall be operated upon by such officers as may be authorised in this behalf by the Central Board.

If any person,—

(a) deducts or attempts to deduct from the wages or other remuneration of a member the whole or any part of the employer’s contribution; or

(b) fails or refuses to submit any return, statement or other documents required by this Scheme or submits a false return, statement or other documents, or makes a false declaration; or

(c) obstructs any Inspector or other official appointed under the Act or this Scheme in the discharge of his duties or fails to produce any record for inspection by such Inspector or other official; or

(d) is guilty of contravention of or non-compliance with any other requirements of this Scheme, he shall be punishable with imprisonment which may extend to one year or with fine which may extend to 1-a [ "four thousand rupees"], or with both.

Substituted - (d) is guilty of contravention of or non-compliance with any other requirements of this Scheme, he shall be punishable with imprisonment which may extend to one year or with fine which may extend to  "twenty-five thousand rupees", or with both.

1-a Substituted - Vide notification G.S.R. 299(E) dated - 28 Apr 2021

 

 

 

(1) The contribution payable by the employer and the Central Government under sub-section (2) and sub-section (3) of section 6C of the Act, shall be calculated on the basis of basic wages, dearness allowance (including the cash value of any food concession) and retaining allowance, if any, actually drawn during the whole month whether paid on daily, weekly, fortnightly or monthly basis:

Provided that where the monthly pay of an employee exceeds 7-a{fifteen thousand rupees,} the contribution payable in respect of him by the employer and the Central Government shall be limited to the amounts payable on a monthly pay of 7-a {fifteen thousand rupees,} dearness allowance, retaining allowance (if any) and cash value of food concession.

(2) Each contribution shall be calculated to the nearest rupee, 50 paise or more to be counted as the next higher rupee and fraction of a rupee less than 50 paise to be ignored.


7-a Subsituted by G.S.R. 610 (E) dated 22/08/2014. 

 

(1) This Scheme may be called the Employees’ Deposit-Linked Insurance Scheme, 1976.

(2) The provisions of this Scheme shall come into force on the 1st day of August, 1976.

(3) Subject to the provisions of sub-section (2) of section 16 and section 17(2A) of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, this Scheme shall apply to the employees of all factories and other establishments to which the said Act applies:

Provided that the provisions of this scheme shall not apply to tea factories in the State of Assam.

 

 

 

8A-a{(1) Where an employer makes default in the payment of any contribution to the Insurance Fund, or in the payment of any charges payable under any other provisions of the Act or the Scheme, the Central Provident Fund Commissioner or such officer as may be authorised by the Central Government by notification in the Official Gazette in this behalf, may recover from the employer by way of penalty, damages at the rates given below:

 

Period of default

Rate of damages

(% of arrears per annum)

(a)

(b)

(c)

(d)

Less than two months

Two months and above but less than four months

Four months and above but less than six months

Six months and above

5

10

15

25

(2) The damages shall be calculated to the nearest rupee, 50 paise or more to be counted as the nearest higher rupee and fraction of a rupee less than 50 paise to ignored.

 


8A-a substituted by G.S.R. 690 (E) dated 26/09/2009 w.e.f.26/09/2008

 

(1) All moneys standing to the credit of the Insurance Funds as on 31st March, 1997 shall be kept in deposit with the Central Government shall allow interest at a rate not less than 8.1/2% per annum.
                (2) The moneys credited as contributions to the Insurance Fund on and from the 1st day of April, 1997 shall be invested as per the investment pattern notified under paragraph 52 of the Employees’ Provident Funds Scheme, 1952.

 

 

 

(1) Every employer shall send to the Commissioner, within fifteen days of the commencement of the Scheme, a consolidated return in such form as he may specify, of the employees who are entitled and required to become members of the Insurance Scheme showing, inter al/a, the Insurance Scheme number, name, accumulations in the Insurance Scheme as at the end of the financial or accounting year preceding the date on which this Scheme comes into force together with certified copies of nomination executed by each employee under the rules of the Provident Fund of the establishment.

(1A) Every employer shall send to the Commissioner, within fifteen days of the close of each month, a return in Form 5 of the Employees’ Provident Fund Scheme of the employees,—

(a) qualifying to become members of the Insurance Fund, for the first time during the preceding month together with the certified copies of nomination made by each such qualifying employee and

(b) leaving service of the employee during the preceding month [* * * ]:

Provided that if there is no employee qualifying to become a member of the Insurance Fund for the first time or there is no employee leaving the service of the employer during the preceding month, the employer shall send a NIL return.

(1 B) Every employer shall send to the Commissioner, within twenty-five days of the close of the month, in such form as he may specify, a monthly abstract showing inter al/a, the aggregate amount of wages of all the members on which contributions are payable and the employers’ contribution in respect of all such members for the month.

(2) Every employer shall maintain such accounts in relation to the amounts contributed to the Insurance Fund by him as the Central Board may, from time to time, direct, and it shall be the duty of every employer to assist the Central Board in making such payment from the Insurance Fund [* * * ] as are sanctioned by or under the authority of the Central Board. 

       10-a{(3)  Every employer shall send to the commissioner an electronic format of the returns referred to in sub- paragraphs (1) ,(1A) and (1B) in such form and manner as may be specified by the commissioner   )

 (4)  [xxx]

 
          10-a insterted by S.o. 1810 (E) dated 05/08/2011 w.e.f.05/08/2011


 

(1) The nominee or nominees or other claimants shall send a written application to the Commissioner through the employer in such form as the Commissioner may specify, to claim payment under this Scheme.

(2) If the person to whom any amount is to be paid under this Scheme is a minor or a lunatic, the payment shall be made in accordance with the provisions in the Employees’ Provident Funds Scheme, 1952, relating to payment to such persons.

1a (3) The payment may be made to the person, to whom payment is to be made through electronic or digital funds transfer system in any Scheduled commercial bank or any post office.”

(4) The claims, complete in all respects submitted alongwith the requisite documents shall be settled and benefit amount paid to the beneficiary within 24-a{twenty days} from the date of its receipt by the Commissioner. If there is any deficiency in the claim, the same shall be recorded in writing and communicated to the applicant within 24-a{twenty days} from the date of receipt of such application. In case the Commissioner fails without sufficient cause to settle a claim complete in all respect within 24-a{twenty days}, the Commissioner shall be liable for the delay beyond the said period and penal interest @12% per annum may be charged on the benefit amount and the same may be deducted from the salary of the Commissioner.

24-a - Substituted by F.No.S-65013/1/2015-SS-II dated 2/07/2015

1a substituted as per the notification w.e.f 04.05.17




 

 

22-a {(1) On the death of an employee, who is a member of the Fund or of a provident fund exempted under Section 17 of the Act, as the case may be, the persons entitled to receive the provident fund accumulations of the deceased shall, in addition to such accumulations be paid an amount, equal to the average balance in the account of the deceased in the Fund or of a provident fund exempted under section 17 of the Act, as the case may be, during preceding twelve months or during the period of his membership, whichever is less, except where the average balance exceeds rupees fifty thousand, the amount payable shall be rupees fifty thousand plus 40% of the amount in excess of rupees fifty thousand subject to a ceiling of rupees one lakh.”}

 

 [***]
  Explanation 1.—For the purpose of determining the average balance in the Fund or in the provident fund exempted under section 17 of the Act, as the case may be, in relation to any employee, the sum total of contributions by the employee and the employer, due for and up to the relevant period, whether paid or unpaid in the Fund or in the provident fund exempted under section 17 of the Act, as the case may be, together with interest thereon, shall be included.
 Explanation 2—The period of twelve months for calculation of benefits under this Scheme shall be computed backwards from the month preceding the month in which death of the member occurs.
  (2) In the case of a part-time employee who was a member of Fund 4 or of a Provident Fund exempted under section 17 of the Act, as the case may be, while serving in more than one factory or establishment the quantum of benefit under this Scheme shall be determined with reference to the average of the aggregate balance in all his accounts in the Fund or of a Provident Fund exempted under section 17 of the Act, as the case may be, during the preceding twelve months.
22-d{“(22A) On the death of an employee, who is a member of the Fund or of a provident fund exempted under Section 17 of the Act, as the case may be, who was in the employment of the same establishment for a continuous period of twelve months,preceeding the month in which he died ,the persons entitled to receive the provident fund accumulations of the deceased shall, in addition to such accumulations be paid an amount ,equal to :-

(i) the average monthly wages drawn (subject to a maximum of rupees Six thousand five hundred) during the twelve months proceeding the month in which he died ,multiplied by twenty times or,

(ii) the amount of benefit under sub-paragraph(1),whichever is higher.”

“Explanation.- In the case of a part-time employee who is a member of the Fund or of a provident fund exempted under Section 17 of the Act, as the case may be ,who was serving in more than one factory or establishment for a continuous period of twelve months,preceeding the month in which he died ,the quantum of benefit under this Scheme shall be determined with reference to the average wages of the affregate of all the wages wherever he was continuously working for more than twelve months, subject to the wage ceiling of rupees six thousand five hundred.”}

  22-b{(3) On the death of an employee, who is a member of the Fund or of a provident fund exempted under Section 17 of the Act, as the case may be, who was in the employment of the same establishment for a continuous period of twelve months, preceding the month in which he died, the persons entitled to receive the provident fund accumulations of the deceased shall, in addition to such accumulations be paid an amount, equal to: -

22.3.a{(i) the average monthly wages drawn (subject to a maximum of fifteen thousand rupees), during the twelve months preceding the month in which he died, multiplied by 1-a  [ “thirty times”] plus fifty per cent. of the average balance in the account of the deceased in the Fund or of a provident fund exempted under section 17 of the Act or under paragraph  27 or 27A of the Employees’  Provident  Funds Scheme, 1952,  as  the  case  may  be,  during  the  preceding  twelve  months  1- b[“or  during  the  period  of  his membership], whichever is less subject to a ceiling of     1-c["one lakh and fifty thousand rupees"]:[Provided that the assurance benefit shall not be less than two lakh and fifty thousand rupees:1-e] Provided further that the assurance benefit shall not exceed 1-d ["six lakh rupees"]

(i) the average monthly wages drawn (subject to a maximum of fifteen thousand rupees), during the twelve months preceding the month in which he died, multiplied by (Substituted) 1-a "thirty five- times" plus fifty per cent. of the average balance in the account of the deceased in the  Fund or of a provident fund exempted under section 17 of the Act or under paragraph  27 or 27A of the Employees’  Provident  Funds Scheme, 1952,  as  the  case  may  be,  during  the  preceding  twelve  months  or  (Omitted)1-b"during  the  period  of  his membership", whichever is less subject to a ceiling of (Substituted)1-c "one lakh and Seventy five thousand rupees": Provided that the assurance benefit shall not be less than two lakh and fifty thousand rupees : (Inserted) 1-e “with effect from the 15th day of February, 2020" Provided further that the assurance benefit shall not exceed (Substituted)1-d "Seven lakh rupees"

(1-a to 1-e) -  Vide notification G.S.R. 299(E) dated 28 April 2021

3.The provisions of the first proviso of clause (i) of sub- paragraph (3) of paragraph 22 shall be in force for a period of two years from the date of publication of this Scheme in the Official Gazette.”}

"Explanation.- In the case of a part-time employee who is a member of the Fund or of a provident fund exempted under Section 17 of the Act, as the case may be, who was serving in more than one factory or establishment for a continuous period of twelve months, preceding the month in which he died, the quantum of benefit under this Scheme shall be determined with reference to the average wages or the aggregate of all the wages wherever he was continuously working for more than twelve months, subject to the wage ceiling of rupees fifteen thousand."}*
22-c{(4) The beneift under this scheme shall be further increased by twenty percent in addition to the beneifts admissible under 22-f{sub-paragraph (1) or (2)} of paragarph 22,as the case may be."}


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Frequently asked questions

The purpose of the scheme is to provide life insurance benefits to the employees of the establishments covered by the E. P. F. & M. P. Act, 1952. As such the scheme is applicable to the employees of all factories and other establishments covered by the said Act. {Section 6C & Para 1}
The scheme has come into force from 1-Aug-1976 {Para 1}
Under the scheme the employee is not required to pay any contribution. The employer is, however, required to pay every month contribution at the rate of 0.5 percent of the total wages of the employees covered by the scheme. In addition to the contribution the employer has to pay administrative charges at the rate of 0.1 percent of the total wages of the employees covered by the scheme. {Section 6(C) & Para 7}
Where the monthly pay of an employee is more than Rs. 6500.00 the contribution payable in respect of him by the employer (and the Central Government) is limited to the amounts payable on monthly pay of Rs. 6500.00 only. {Para 7}
The benefit provided under the scheme in the nature of life insurance is as follows. On the death of an employee while in service a lumpsum insurance amount is payable to his nominee or family members. The insurance amount is equal to the average balance in the account of the deceased employee in the Provident Fund during a period of 12 months immediately preceding his death. In case the average balance exceeds Rs. 35000.00 subject to a ceiling of Rs. 60000.00. {Para 22}
The employer is prohibited from recovering the employer's contribution payable by him under the scheme by deducting the same from the wages of employees or in any other manner. {Para 9}
The insurance benefit can be claimed by the nominee or the other claimant by making a written application in Form 5(1F) to the Regional Provident Fund Commissioner through the employer under whom the deceased was last employed. {Para 24}
The Employees' Provident Funds and Miscellaneous Provisions Act, 1952, permits the Central Government, subject to specified conditions, to exempt any establishment from the operation of all or any or the provisions of the scheme if the employees of such establishments are, without making any separate contribution or payment of premium, in enjoyment of life insurance benefits which are more favourable than the benefits admissible under the scheme. {Section 17(2A)}
The purpose of the Scheme is to provide for (1) superannuation pension, retiring pension or permanent total disablement pension to employees covered by the Employees' Provident Funds Act, and (2) widow or widower's pension, children pension or orphan pension payable to the beneficiaries of such employees. {Section 6-A(1)}
By an ordinance No. 13 dated 11-Oct-1995 the President has substituted the "Employees' Pension Scheme 1995" for the "Employees' Family Pension Scheme, 1971." The Employees' Pension Scheme is brought into force from 16-Nov-1995

To meet the expenses for administering the Scheme a fund called the Employees' Pension Fund will be set up and from and out of the contribution payable by the employer under section 6 of the Act a part of contribution representing 8.33 percent will be credited to the Fund. The Central Government will also contribute to the Fund at the rate of 1.16 percent of the pay of the members of the Scheme. It is to be noted that where the pay of the member exceeds Rs. 6500.00 per month, the contribution payable by the employer and the Central Government will be limited to the amount payable on his pay of Rs. 6500.00 only. {Section 6-A & Para 3}

 

It is also to be noted that if at the option of the employer and employee, contribution paid on salary exceeding Rs. 6500.00 per month from the date of commencement of this Scheme or from the date salary exceed 6500.00 whichever is later, and 8.33 percent share of the employers thereof is remitted into the Pension Fund, pensionable salary shall be based on such higher salary.

 The Scheme will apply to:

1.     Employees who have been members of the Employees' Family Pension Scheme 1971;

2.     Employees who on or later 16-Nov-1995 become members of the Employees' Provident Fund Scheme, 1952;

Employees who have been members of the Employees Provident Fund but not being members of the Employees' Family Pension Scheme opt to join the Employees' Pension Scheme within six months from 16-Nov-1995. {Para 6}

A.     Before going into the method of calculation of Pension it is necessary to know a few terminologies.

a.     Pensionable Service: The period for which the Pension contributions i.e. 8-1/3% as employer's share are paid to the Employees' Pension Scheme from 16-Nov-1995.

b.     Pensionable Salary: The average salary (Wages + DA / for the last twelve months before the date of exit)

c.     Actual Service: The aggregate of the period of service during which the Pension contribution is paid after 16-Nov-1995

d.     Past Service: The period of service prior to 16-Nov-1995 for which the existing member of Family Pension Scheme had been a member of the Family Pension Scheme.

e.     Eligible Service: Is the total of past service and actual service.

B.     There are three types of pension available to members of the Pension Scheme

                             a.            Superannuation Pension: if the member has rendered eligible service of 20 years and retires on attaining the age of 58 years.

                             b.            Retirement Pension: if the member has rendered 20 years of eligible service and retires or otherwise ceases to be in employment before attaining the age of 58 years.

                             c.            Short Service Pension: If the member has rendered eligible service of 10 years and more but less than 20 years.

C.    For a new entrant ember Superannuation or retirement pension is computed as under:                               

 

Monthly member's Pension

=

Pensionable Salary x Pensionable Service

70

 

The amount of short service pension shall be calculated as if the member has rendered 20 years eligible service. The amount so arrived at shall be reduced at a rate of six percent for every year by which the actual eligible service falls short of 20 years subject to the maximum of 25 percent reduction.

D.    For an employee who is a member of the Family Pension Scheme on 16-Nov-1995 and who has not attained the age of 58 years on 16-Nov-1995, he will get the superannuation/retirement pension as under:

a.     Pension as determined in (C) above or Rs. 635.00 per month whichever is more; and

b.     Past service benefit (for his membership in Family Pension Scheme) as under:

Years of Past Service

Salary upto Rs. 2500.00 p.m.

Salary more that Rs. 2500.00 p.m.

(i) Upto 11 years

80

85

(ii) 11 years but less than 15 years

95

105

(iii) 15 years but less than 20 years

120

135

(iv) Beyond 20 years

150

170

Subject to the minimum of Rs. 800.00 p.m. for 24 years of pas service. How ever the benefits computed as above will be reduced proportionately if the aggregate service is less than 24 years as under: pension arrived at (a+b) above multiplied by years of aggregate service/24, subject to the minimum of Rs. 450.00 p.m.

E.     A member who is above the age of 48 years but less than 53 years on  16-Nov-1995 will get the pension as determined in (c) above or Rs. 438.00 whichever is more +addition of pension @ Rs. 150.00 per month if he has 24 years of past service subject to the minimum of Rs. 600.00. However the pension will be further reduced if the eligible service is less than 24 years as explained in D above, i.e. subject Pension as per (c)  + Additional pension as per the period of past service multiplied by years of aggregate service/24 subject to the minimum of Rs. 325.00 p.m.

If the member's age is 53 or above on 16-Nov-1995 he will get the aggregate pension as determined in (c) above subject to the minimum of Rs. 335.00 + additional pension of Rs. 150.00 for 24 years past service subject to the minimum of Rs. 500.00 to be proportionately reduced for less than 24 years past service as shown above. {Para 12}
A member may opt, on completion of three years from the commencement of the scheme, to commute upto a maximum of one third of his pension son as to receive hundred times the monthly pension so commuted as commuted value of pension. {Para 12-A}

Option for return of Capital: A member being eligible to receive the pension can opt out for any one of the alternatives given below, if he so desires.

 

No

Alternatives

Revised Pension Payable

Amount payable as return of Capital

1

Revised pension during life time of member with return of capital on his death.

90% of original monthly pension

100 times the original monthly pension on death of member to the nominee.

2

Revised pension during the life time of member, further reduced pension during life time of the window or her remarriage which ever is earlier and return of capital on window's death/remarriage

90% of original monthly pension to the member. On his death 80% of the original monthly pension to the window

90 times the original monthly pension on death of window/remarriage to the nominee

3

Pension for a fixed period of 20 years notwithstanding whether the member lives for that period or not

87.5% of the original monthly pension for a fixed period of 20 years. The Pension will cease thereafter

100 times the original monthly pension at the end of 20 years from the date of commencement of pension to the member if he is alive, other wise to his nominee

{Para 13}

An employee who meets with an accident during employment and as a result thereof is permanently and totally disabled to do all work which he was capable of performing at the time of the accident is entitled to get permanent total disablement pension for his life time. To be so entitled the employee need not have rendered any pensionable service but he must have made atleast one month's contribution to the Pension Fund. {Para 15}

Benefits to the Family - On the death of the member -

a.     Widow Pension:

                               i.            If the member dies while in service and has paid at least one month's contribution to the Pension Fund;

                            ii.            After leaving the service but before attaining the age of 58 years having rendered eligible service to be entitled for receiving pension and till his death he has not claimed reduced pension after the age of 50 years;

                          iii.            After commencement of pension on Superannuation/retirement etc.;

                          

b.     In addition to the Widow's pension mentioned at (a), two children of the member will get 25% of the Widow pension, each till the child attains the age of 25 years.

If the wife of the deceased member has predeceased; the two Orphan children will get 75% of the Widow pension, as their parents to not exist {Para 16}
The disbursement of pension will be arranged with agencies like Post Offices, Nationalized Banks or Treasuries. {Para 33}
The Scheme permits the appropriate Government to grant exemption to any establishment from its operation if the employees of the establishment are members of any other pension scheme wherein the pensionary benefits are at par or more favourable than the benefits provided under the Scheme. {Para 39}
The purpose of the scheme is to establish provident funds for the employees covered by the Employees' Provident Funds Act, 1952. As such, the scheme is applicable to the employees of all factories and other establishments covered by the said Act except those exempted under section 17 thereof. {Section 5 & Para 1}
The scheme is made applicable to different factories and different establishments from different dates as specified in paragraph 1 of the scheme. {Para 1}
Every employee employed in or in connection with the work of a factory or other establishment covered by the scheme other than an excluded employee is entitled and required to become a member of the Fund from the date of joining the factory or establishment. An excluded employee shall, on ceasing to be such an employee, be entitled and required to become a member of the Fund from the date he ceased to be such employee. {Para 26}
The persons employed by or through a contractor are included in the definition of "employee" under the Employees' Provident Funds Act, 1952, and as such, they are covered under the Scheme. {Para 30}

"Excluded employee" means-

       i.            an employee who, having been a member of the Fund, has withdrawn the full amount of his contribution in the Fund (a) on retirement from service after attaining the age of 55 years of (b) before migration from India for permanent settlement abroad; or for taking employment abroad;

    ii.            an employee whose pay at the time he is otherwise entitled to become a member of the Fund, exceeds Rs. 6500.00 per month;

a person who, according to the Certified Standing Orders, is an apprentice, or who is declared to be an apprentice by the authority specified in this behalf by the appropriate Government. {Para 2(f)}
The contribution payable by the employer under the Scheme is 12 percent of the wages of an employee. The contribution payable by the employee under the Scheme is equal to the contribution payable by the employer in respect of such employee. {Section 6 & Para 29}
Where the monthly pay of an employee exceeds six thousand five hundred rupees the contribution payable by him, and in respect of him by the employer, shall be limited to the amounts payable on a monthly pay of six thousand five hundred rupees. {Para 26-A }

The P. F. Contribution is to be deducted –

      1.  On basic wages
2. Dearness allowance and the retaining allowance if any.  {Section 6}

Arrears are emoluments earned by the employee while on duty and provident fund contributions have to be deducted from such wages.
A member, if he so desires, may contribute an amount exceeding 12 percent as the case may be but the employer shall not be under an obligation to pay contribution over and above his contribution payable under the Act. {Para 29}
Compound interest, at a rate determined by the Central Government from time to time, is paid on the amount standing to the credit of a member as on 1st day of April every year. {Para 60}
The employer is required to pay administrative charges at the rate of 1.10 percent of the pay payable to the employees in respect of which provident fund contributions are payable. {Para 38 & 39}
if a member of the Fund goes from one establishment to another or from one region to another, the balance of his Provident Fund is transferred form the old account to a new account in the new establishment. {Section 17 & Para 57}
No nomination can be made under the E. F. P. Scheme in favour of a person who is not a member of the "family". The word "family" is defined in Para 2(g) of the Scheme and according to the definition brother is not a member of the "family". The nomination made in favour of brother is invalid.
Each member has to make a nomination to receive the amount standing to his credit in the Fund in the event of his death. If he has a family, he has to nominate one or more persons belonging to his family and none other. If he has no family he can nominate any person or persons of his choice but if he subsequently acquires a family, such nomination becomes invalid and he will have to make a fresh nomination of one of more persons belonging to his family. A nomination can be modified by the member at any time. {Para 61}

The following three kinds of benefits are provided under the scheme: (1) Withdrawal benefit, (2) Benefit of non-refundable advances, (3) Benefit of financing of Life Insurance Policies.

1.     Withdrawal Benefit

a.     A member can withdraw the full amount standing to his credit in the Fund in the following circumstances immediately

                                                       i.            Retirement after attaining the age of 55 years,

                                                    ii.            retirement due to incapacity for work,

                                                  iii.            migration for permanent settlement abroad,

                                                  iv.            mass retrenchment,

                                                     v.            voluntary retirement,

                                                  vi.            closer of establishment,

                                                vii.            transfer to an establishment not covered under the Act,

                                             viii.            discharge with payment of retrenchment compensation, etc {Para 69}

b.     In all the order cases of leaving services he can withdraw the full amount if he remains unemployed after the waiting period of two months unemployment.

2.     Benefit of Non-refundable Advances: Non-refundable advances from the amount standing to the credit of a member in the Fund can be sanctioned for the following purposes:

 .       purchase of a house, {Para 68B}

a.     repayment of a loan, for housing, {Para 68BB}

b.     unemployment due to lock-out or temporary closure, {Para 68H}

c.     unemployment due to illness, {Para 68J}

d.     marriage of a self of of daughter, son, sister or brother, {Para 68K}

e.     education of son or daughter, {Para 68K}

f.      exceptional calamity, etc. {Para 68L}

g.     withdrawal for investment in Varishta Pension Bima Yojana. {Para 68NNN}

Benefit of financing of Life Insurance Policies: This benefit can be available as specified in Paragraphs 62 to 67. {Para 62 to 67}
The scheme provides for payment of benefit by the Commissioner within 30 days from the date of receipt of claim application {Para 72(7)}
On the death of a member the amount standing to his credit in the Fund is payable to his nominee or nominees. If there is no nominee, such amount is payable to his family members in the manner specified in Paragraph 70 of the Scheme or in their absence to the legal heir. {Para 70}
Every year the Commissioner for Employees' Provident Fund sends to each member, through the employer, a statement of his account in the Fund showing the opening balance, the amount contributed during the year, withdrawal during the year, the amount of interest and the closing balance. If the member finds any error in the statement, he has to bring it to the notice of the Commissioner within 6 months from the receipt of the statement. {Para 73}

If any person-

a.     deducts from the wages of a member the whole or any part of the employer's contribution;

b.     fails to submit any return, statement or other document required by the Scheme or submits a false return, statement or other document or makes a false declaration;

c.     obstructs any inspector appointed under the Act or the Scheme in the discharge of his duties or fails to produce any record for his inspection;

is guilty of contravention of or non-compliance with any other requirement of the Scheme; he would be punished with imprisonment upto 1 year, or fine upto Rs. 4000.00 or with both. {Section 14(2) & Para 76}
The offence of failure to pay contributions amounts to continuing offence. In all other cases the offence is one committed once and for all. Failure to submit return is not continuing offence.
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