Centre’s EPFO dues surge to ₹9,115 crore amid fiscal pressure

The cumulative arrears to the Employees’ Provident Fund Organisation (EPFO) are only till the end of March and have increased since then, a senior government official said on condition of anonymity.

Of the total dues, 8,063.66 crore is the government’s contribution to employees pension scheme (EPS) and the remaining amount is its arrears towards a minimum pension benefit for low-wage organized sector workers, according to documents reviewed by Mint, and two officials familiar with the development, including the one cited above.

The issue was discussed in August and then in the following month among top officials of the retirement fund manager, who termed the situation as “worrying", the second official said. The size of the accumulated dues has prompted EPFO to go slow on a decision to raise pension for its members, the person said.

As part of the EPS scheme, the Union government offers an additional 1.16% of the pension contribution of subscribers whose monthly salary is less than 15,000. According to the EPF Act, an employee pays 12% of the basic salary as EPF contribution and a matching amount is paid by the employer. Of the employer’s contribution, 8.33% goes to EPS and rest to the EPF corpus.

A finance ministry spokesperson didn’t respond to an email on Friday seeking comment. A labor ministry spokesperson said he is not aware of any development. EPFO functions under the labor ministry.

“Since the 2014-15, the Union government has not given its yearly EPS contribution. Instead, it is paying a portion of the arrears every year," the second official said.

In 2018-19, for example, the central government’s share of EPS contribution was 5,483 crore but it didn’t pay its share. Instead, it paid 3,900 crores of arrears.

Before 2014-15, in 2005-06 and in 2012-13, the central government held back its annual contribution though it paid a portion of its dues in each of these years, according to documents reviewed by Mint.

The second official said successive governments have failed to address the problem.

As of 31 March 2014, the government owed EPFO 2,882.88 crore, which has now almost tripled.

In the case of the minimum pension, the Centre has, however, increased its payout to reduce cumulative arrears to some extent. While cumulative arrears on account of the minimum pension in 2016-17 was 1,198.63 crore, it reduced to 1,051 crores in the year ended 31 March.

EPFO does charge interest to the Union government on its arrears. “As of now, we are managing as pension outgo is not bigger than our earnings and pension corpus. If we fall short, the problem will start," a third government official said. A labour ministry official, who also declined to be named, said the ministry is regularly in touch with the finance ministry on the matter.