EPF seeks to enrol more pvt sector employees

KATHMANDU, SEP 17 -

The Employees Provident Fund (EPF) said on Tuesday that it was making efforts to enrol more private sector employees as they get less social security benefits compared to government staff.

It plans to introduce a pension scheme and health insurance for jobholders in the private sector after the amended EPF Act is endorsed by Parliament. The EPF has sent  a draft of the amendment bill to the Finance Ministry which will allow it to implement the proposed new schemes.

“The current act only states that the EPF can introduce measures to benefit its members after getting the government’s approval, but it does not specifically say whether we can introduce pension and health insurance for private sector employees,” said Krishna Prasad Acharya, administrator of the EPF. “The amendment will open the door for such schemes.”

He added that the amendment to the act would also permit self-employed people and informal sector employees to join its schemes. The law only talks about providing its services to employees in the formal sector and companies employing more than 10 persons.

“If the act is amended immediately, our internal calculation is that we can add 25,000 new members from the private sector,” said Acharya. Currently, its serves 40,000 employees from the private sector who contribute Rs 20 billion to its reserves. The EPF holds deposits amounting to Rs 170.63 billion of around 500,000 employees.

In the last fiscal year, the EPF added 2,050 employees in its rolls from 102 private companies.

“We are focusing on private sector employees as they are more vulnerable than government employees and there is untapped potential too,” said Acharya.

Rajendra Kafle, deputy chief at the human resources department of the EPF, said they had planned to increase publicity besides holding talks with the proprietors and trade union members in the private sector in a bid to convince more workers to join the EPF.

Besides increasing the number of depositors, the EPF has planned to enlarge the source fund aggressively to provide loans to employees. According to the EPF, the source fund will be raised to Rs 300 billion within the next three years. “Based on the existing annual growth rate of 17 percent with a successive growth in the number of depositors, we are hopeful of meeting the target,” said Acharya.

The EPF’s swelling deposits have prompted it to invest in government bonds. “We will formulate the necessary plan and strategy to utilize long-term funds in productive businesses through the government’s savings and credit certificates.”

According to Acharya, they plan to lend money to workers under new headings. “We will first identify our customers’ product-based and financial-based needs before providing the loan.”

Likewise, the EPF has been trying to launch mutual investment plans to ensure a high rate of return for the employees’ deposits.

Although the EPF has planned to limit the operating cost to 5 percent of its total income, it said it was finding it hard to do so due to high inflation.

According to the EPF, it will also prepare and implement a five-year strategy for providing social security, mobilizing financial resources and recovering them, restructuring the organization and improving human resources and information and communication.

Source: Republica