Retirement fund body EPFO is likely to increase the maximum amount assured under its Employees' Deposit Linked Insurance Scheme (EDLI) to Rs 5.5 lakh from the existing Rs 3.6 lakh.
The proposal to raise the insurance benefit for over six crore subscribers of the Employees' Provident Fund Organisation (EPFO) will be put up for approval of Pension and EDLI Implementation Committee on September 9, as per the agenda of the meeting.
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After getting the committee's nod, it will then be placed before the EPFO's apex decision making body the Central Board of Trustees' (CBT) headed by the Labour Minister.
Once the trustees give their nod, the EDLI scheme will be amended by a notification of the ministry. At present, in case of demise of a subscriber after one year continuous service in the same organisation, the nominee gets 20 times of average wage drawn during the past 12 months with 20 per cent bonus on it.
With the wage ceiling of Rs 15,000 per month, the maximum amount assured works out to be Rs 3.6 lakh. It is now proposed that the maximum benefit should be raised to 30 times of the average pay drawn during preceding 12 months in addition to 50 per cent of the average balance of the EPF account subject to a ceiling of Rs 1 lakh.
Once approved by the CBT, the maximum sum assured will increase to Rs 5.5 lakh. The proposal also seeks to do away with the condition of two sets of calculations for computing sum assured for subscribers with less than 12 months of service and after completing 12 months.
In the existing scheme, the subscribers with less than 12 months of service are entitled to a maximum sum of Rs 1.2 lakh.
These category of subscribers are entitled to a sum assured which is equivalent to their average balance in the PF account if it is less than Rs 50,000.
In case the PF balance is more than Rs 50,000, they are entitled for the same amount and in addition 40 per cent of the amount above Rs 50,000 subject to a maximum ceiling of Rs 1 lakh.
They are also entitled to 20 per cent bonus over due amount. According to the annual report, the EPFO had a corpus of Rs 15,722.99 crore till March 31.
It received an incremental deposit of Rs 936.12 crore towards the insurance fund in last fiscal. Under the EDLI scheme, 0.5 per cent of the basic wages of workers are contributed as insurance premium every month.