To preserve monthly pension benefits, the government may separate the provident fund and pension accounts of millions of formal sector workers covered by the Employees' Provident Fund Organization (EPFO).
The move is being seen as a pension reform under the labour code on social security. Authorities believe that once EPFO subscribers have a separate pension account, they won’t withdraw their pension accumulations along with employees’ provident fund (EPF).
When workers withdraw their provident fund, they end up breaking into their pension fund, too, because they are part of a single account at the moment, according to two government officials.
The problem has become acute post the pandemic, with mounting joblessness. A total of 7.63 million employees have dipped into these savings under a clause called Covid advance as of May 31 2021, following the outbreak of the pandemic last year. Since April 1 2020, some 39 million claims, including Covid advances, have been settled by EPFO as of June 19 2021.