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Employees' Deposit Linked Insurance Scheme, 2000

Updated on:13th Aug, 2024
Para Description

(1) The Scheme may be called the Employees Deposit Linked Insurance Scheme, 2000.

(2) The Scheme shall come into force on the 1st day of January 2001.

(3) Subject to the provisions of Sections 18 and 19 of the Jammu and Kashmir Employees Provident Funds and Miscellaneous Provisions Act, 1961, this Scheme shall apply to the employees of all factories and other establishments to which the said Act applies.

 

In this Scheme, unless the context otherwise requires :—

(a) “Act” means the Jammu and Kashmir Employees Provident Funds and Miscellaneous Provisions Act, 1961.

(b) “Board of Trustees” means the Board of Trustees constituted under paragraph (3) of the Employees Provident Funds Scheme, 1961.

(c) “Insurance 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.

(d) All other words and expressions used herein but not defined shall have the same meaning as assigned to them in the Act or in the Employees Provident Funds Scheme, 1961.

This Scheme shall be administered by the Board of Trustees.

 

The Contribution payable by the employer and the Government under sub-section (2) of section 7-A shall be calculated on the basis of basic wages, dearness allowance including the cash value of any food concession and the retaining allowance, if any actually drawn during the whole month whether paid on daily, weekly, fortnightly or monthly basis.

 

(1) The contributions by the employer shall be remitted by him at such rate as the Government may fix from time to time to the Insurance fund 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 be borne by the employer.

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

 

The employer shall not deduct the contribution payable by him under this Scheme from the wages of the employees or to recover it from them in any other manner than what is provided in the contract.

 

(1) Every employer shall send to the Commissioner returns in such form as may be specified by the Commissioner for the purposes of this Scheme.

(2) Every employer shall maintain such accounts in relation to the amount contributed to the insurance fund by him as the Commissioner may from time to time direct and it shall be the duty of every employer to assist the Commissioner in making payment out of insurance fund to the claimants.

 

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 in his possession for inspection.

 

The amount received as the employer’s contributions to the Insurance fund under sub-section (2) of Section 7-A shall be credited to the account called the “Deposit Linked Insurance Fund Account” and all expenses towards the cost of any benefit provided by or under the scheme shall be met out of this account.

 

All the moneys belonging to the fund shall be invested in the same way as is being done in the case of provident fund moneys.

 

On the death of an employee who is a member of the fund, the person entitled to receive the provident fund accumulations, be paid an amount equivalent to the average balance to the credit of such a C.P. Fund Subscription in provident fund account during the period of 12 months proceeding his death; provided such average balance does not exceed Rs 25000/- Where such balance exceeds Rs 25000/- the insurance cover would be equal to Rs 25000/- plus 25% of the amount of average provident fund balance in excess of Rs 25000/- subject to overall limit of Rs 35000?

 

(1) The nomination made by an employee under the Employees Provident Funds, Scheme,1961 shall be treated as nomination 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 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 deceased son who have attained majority;

(c) married daughters whose husbands are alive;

(d) married daughters of a deceased son whose husbands are alive:

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 persons legally entitled to it.

 

(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 lunatic, the payment shall be made in accordance with the provisions of the Employees Provident Funds Scheme, 1961 relating to payment to such persons.


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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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