EPFO plans to extend life insurance cover to people out of a job at a nominal premium amount for up to three years.
For people unfortunate enough to lose their jobs, here’s a silver lining. The government plans to continue providing them life insurance as long as they get employed in three years.The state-run Employees’ Provident Fund Organisation (EPFO) plans to extend life insurance cover to people out of a job at a nominal premium amount for up to three years.The move will help thousands of organised sector workers who lose insurance cover the moment they’re unemployed, a major handicap in a country where around 3% people are insured.
The proposal comes days after the government was forced to scrap proposed changes to provident fund withdrawals following violent protests by thousands of garment workers in Bengaluru.The decision to provide insurance cover is expected to re-build the image of the government dubbed anti-poor by the Opposition after proposed changes barred workers from withdrawing entire retirement fund if unemployed for at least two months.
Every month, employees contribute 12% of their pay to the EPF account. The employer puts in an identical sum, 0.5 % of which is earmarked for the Employee’s Deposit Linked Insurance Scheme.
Under this initiative, each employee is guaranteed an insurance ranging between Rs 5,000 and Rs 6 lakh, depending upon the salary and duration of service, irrespective of the balance in the PF.This is crucial in India where millions of lower-middle class workers depend on provident fund withdrawals in the absence of a formal social security net.
Current guidelines say that when an employee loses their job, the life insurance scheme is discontinued until they get another job.“By paying a small amount of premium, the EDLI scheme will cover those unemployed up to three years,” an EPFO official said.
The decision is expected to be ratified by the central board of trustee (CBT) — the highest decision making body of the EPFO — in its next meeting. Out of employer’s share, 8.33% goes for pension scheme, 3.67% for provident fund and 0.5% for insurance scheme.(News Courtesy:hindustantimes)