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Unit 11: Employees’ Provident Fund Act, 1952

12. The .................. establishments are also required to maintain proper accounts, submit Notes
prescribed returns, invest provident fund accumulations in the manner prescribed by the
central Government from time to time, and to pay inspection charges.

11.5 The Employees’ Deposit-Linked Insurance Scheme, 1976

The Central Government may by notification in the Official Gazette frame a Scheme to be called
the Employees” Deposit-linked Insurance Scheme for the purpose of providing life insurance
benefits to the employees of any establishment or class of establishments to which this Act applies.
There shall be established as soon as may be after the framing of the Insurance Scheme Deposit-
linked Insurance Fund into which shall be paid by the employer from time to time in respect of
every such employee in relation to whom he is the employer such amount not being more than
one per cent of the aggregate of the basic wages dearness allowance and retaining allowance (if
any) for the time being payable in relation to such employee as the Central Government may by
notification in the Official Gazette specify.
The scheme came into force from August 1, 1976. It is applicable to all factories/establishments
to which the Employees’ Provident Funds Act, 1952 applies. All the provident fund member-
employees, both in the exempted and unexempted establishments, are covered under this
scheme. While the employees are not required to contribute to the Insurance Fund, the employers
are required to pay contributions to it at the rate of 0.5% of the pay of the employers who are
provident fund subscribers. The Central Government also contributes to the’ insurance fund at
the rate of 0.25% of the pay in respect of the covered employee.

Notes The employers are also required to pay administrative charges to the insurance
fund at the rate of 0.01% of the pay drawn by the employees, subject to a minimum of
` 2 per month. The Central Government also meets partly the expenses in connection with
the administration of the insurance scheme by paying into the insurance fund an amount,
at the rate of 0.005% of the pay drawn by the employee members subject to a minimum of
` 1 per month. The employers of exempted establishments are required to pay inspection
charges at the rate of 0.02% of the pay of the employee-members.

Under the Scheme, the nominees/members of the family of employees of covered establishments
will get, in the event of death while in service, an additional amount equal to the average balance
in the provident fund account of the deceased during the preceding 12 months wherever the
average provident fund balance is less than ` 25,000. In cases where the average provident fund
balance of preceding twelve months exceeds ` 25,000 plus 25% of the amount in excess of ` 25,000
subject to a maximum of ` 35,000.
There is provision in the scheme for the exemption of factories/establishments which have an
insurance scheme approved by government and conferring-more benefits than those provided
under this statutory scheme, provided that a majority of the employees are in favour of such
exemption. Subject to certain conditions, individual employees or class of employees may also
be granted exemption. The Central Government is the appropriate authority to grant exemption
from the Employees’ Deposit-Linked Insurance Scheme under Section 17(2A).
The employer shall pay into the Insurance Fund such further sums of money not exceeding
one-fourth of the contribution which he is required to make under sub-section(2) as the Central
Government may from time to time determine to meet all the expenses in connection with
administration of the Insurance Scheme other than the expenses towards the cost of any benefits
provided by or under that Scheme.

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