EPFO and ESIC Extension To Covid-Hit Families

• 01 Jun 2021

Why in News

Recently, the government has announced an extension of pension coverage and insurance benefits for families of those who died due to Covid-19.

• The pension coverage will be extended under the Employees’ state Insurance Corporation of India (ESIC) scheme and insurance benefits under the Employees’ Deposit-Linked Insurance (EDLI) scheme for members registered under the Employees’ Provident Fund Organisation (EPFO).

Key Points

• Extension of Benefits Under ESIC Scheme:
  
  • All dependent family members of such persons (who died of Covid) will be eligible for a pension equivalent to 90% of the average daily wage drawn by the worker as per the existing rules.
    
    • This benefit will be available retrospectively with effect from 24^th March 2020 till 24^th March 2022.
  • The eligibility conditions for the ESIC benefits are likely to include the norm that the insured person must have been registered on the ESIC online portal at least three months prior to the diagnosis of Covid resulting in death, the insured person must have been employed for wages and contributions for at least 78 days.
• Under EPFO-EDLI:
  
  • The maximum insurance benefit has been increased to Rs 7 lakh from Rs 6 lakh.
  • The provision of minimum insurance benefit of Rs 2.5 lakh has been restored and it will apply retrospectively from February 2020 for the next three years.
  • Benefits are being made available to families of even those employees who may have changed jobs in the last 12 months preceding his/her death.
  • All surviving dependent family members of EPFO are eligible to avail benefits of EDLI in case of death of the member.
    
    • About 6.53 crore families are expected to be eligible.

Employees’ State Insurance (ESI) Scheme

• About:
  
  • It is a multidimensional social system which provides socio-economic protection to the worker population and immediate dependent or family covered under the ESI scheme.
  • The ESI is an integrated measure of social Insurance embodied in the Employees' State Insurance Act, 1948.
• Coverage:
  
  • ESI Act applies to all factories and notified establishments located in implemented areas employing 10 or more persons and is applicable on employees drawing wages up to Rs 21,000 per month (Rs 25,000 for persons with disabilities).
  • It covers about 3.49 crore of family units of workers and provides cash benefits and medical facilities to 13.56 crore beneficiaries.

Employees’ Deposit-Linked Insurance

• It is an insurance cover provided by the EPFO for private sector salaried employees. It was launched in 1976.
  
  • Any employee who has an EPF account automatically becomes eligible for the EDLI scheme.
• The registered nominee receives a lump-sum payment in the event of the death of the person insured, during the period of the service.
  
  • It applies to all organisations registered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952.
• The EDLI scheme is managed on the basis of 0.5% of monthly wages paid by the employer to the fund and there is no employee contribution. The nominee registered by the employee is eligible to claim the benefit under the scheme.

Employees’ Provident Fund Organisation

• It is a government organization that manages provident fund and pension accounts for the workforce engaged in the organized sector in India.
• It implements the Employees’ Provident Fund (EPF) and Miscellaneous Provisions Act, 1952.
  
  • The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 provides for the institution of provident funds for employees in factories and other establishments.
• It is administered by the Ministry of Labour & Employment, Government of India.

Employees’ Provident Funds Scheme

• EPF is the main scheme under the Employees’ Provident Funds and Miscellaneous Act, 1952.
• It offers the institution of provident funds for factory employees and other establishments.
• The employee and employer each contribute 12% of the employee’s basic salary and dearness allowance towards EPF.
  
  • The Economic Survey 2016-17 had suggested that employees be allowed to choose whether or not to save 12% of their salary into EPF or keep it as take home pay.
• As per current laws, a person mandatorily becomes a member of EPF if his monthly salary does not exceed Rs. 15,000.

Source: IE