Page 301 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Corporate Legal Framework

Notes
It is also understood that there would be a "default option" of a pension fund manager and
a pension fund for subscribers who do not want to choose among the various service
providers and their products. This default fund manager is likely to be a public sector
undertaking.

Source: thehindubusinessline.com

13.6 The Employees' Deposit-linked Insurance Scheme, 1976

The scheme came into force from August 1, 1976. It is applicable to all factories/establishments
to which the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 applies. All
the provident fund member-employees 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 employees 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. 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 a 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).

13.6.1 Private Provident Fund Scheme

Establishments employing 100 or more persons may opt for a Private Provident Fund Scheme
after getting it approved by the Commissioner u/s 16A. A private scheme shall not be approved,
if it is in any way less beneficial to the employees than the government's scheme, and at least
majority of employees consent to it. A private scheme is usually drawn on the pattern of the
government scheme.

13.6.2 Settlement of Claims within 30 Days

All claims relating to provident fund and pension complete in all respects submitted along with
the requisite documents shall be settled and benefit amount paid to the beneficiaries within
30 days of receipt. Any deficiency in the claim shall be recorded in writing and communicated to
the applicant within 30 days. For any delay beyond 30 days without sufficient cause, interest @
12% p.a. on the benefit amount shall be payable to the beneficiary, which shall be recoverable
from the Commissioner's salary.

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