EPFO contribution may go down below 12 % to reduce pension in the long run: The pension contribution of employees in the organized sector will be reduced from the mandatory 12 % so far. It means that the pension amount after retirement will decrease.
On the other hand, the organized employees will have their pension contribution money in hand to increase the country's deteriorating consumption demand. Only then the beleaguered GDP at 4.5 %, the lowest in six years, from 8 % last year, will improve. The change of EPFO contribution to be tabled in the parliament as part of the social security code bill 2019 this week.
Reports have surfaced in the Economic Times that the organized sector employees need to pay between 9 to 12 % as their contribution to the pension scheme. Also, the government has proposed to scrap the EPFO switch over to the NPS. EPFO is the Employees' Provident Fund Organization maintains the pension funds of employees.