Provident Fund Act to be amended to widen scope
KATHMANDU, NOV 15 -
The government is preparing to amend the Employees Provident Fund Act (EPF Act) so that employees in the informal sector and the self-employed can also benefit from its services. The EPF Act in its present form only allows employees of institutions in the organised sector employing at least 10 persons to join the fund.
As per the proposed amended act which has been submitted to the Cabinet for its examination, professionals like chartered accountants, doctors and lawyers and their employees will be able to obtain the EPF’s services.
Likewise, migrant workers, domestic workers and workers in the agricultural sector will be eligible to join the EPF.
An official of the EPF said that the exact amount to be collected from this workforce and the self-employed would be determined by the regulation after the amended act is endorsed by Parliament.
As per the current act, institutions where 10 or more people are employed may deduct a portion of their salary to be deposited with the EPF. The institutions deduct a specified portion of the salary of not less than 10 percent and make a matching contribution. The amount is then deposited with the EPF. “The proposed act will not have any restriction on the number of employees,” said the EPF source. “The amount to be collected will also be a fixed sum and not stipulated as a percentage through the regulation for the self-employed.”
The source said that the new act would also open the door for the EPF to invest in hydropower and other infrastructure projects and mutual funds.
The EPF has lately increased its investment in the hydropower sector by financing the Upper Tamakoshi and subsidiary projects of Chilime Hydropower Company. It has planned to enlarge its sources of funds aggressively to provide loans to employees. As of the last fiscal year, the total provident fund amounted to Rs 163.65 billion, and the EPF plans to raise this figure to Rs 300 billion within the next three years. The EPF’s swelling deposits have prompted it to invest in government bonds.
It aims to formulate the necessary plan and strategy to utilize long-term funds in productive businesses through the government’s savings and credit certificates. It also plans to lend money to employees under new headings. Likewise, the EPF has been trying to launch mutual investment plans to ensure a high rate of return for the employees’ deposits.
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: The Kathmandu Post
