PF LIMIT INCREASE TO RS.15000/- IS WINDFALL IN WAITING

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A 22 year old boy had applied for Provident Fund claim and I questioned him on the logic of it. He replied that he wants his one year PF money to buy a smart phone as margin money. I was not aghast as I have seen even engineers displaying similar tendency to repossess the PF that according to them was forcibly deducted from their salary.
                
Most of the employees in the non Income tax category have been finding their salary just enough to make both ends meet also fulfilling partly their aspiration to possess items of prestige. Hence job hopping in search of greener pastures  is common among them and while hopping they also mop up  their PF. While it is perfectly fine to hop I am against the mop.

PF is deducted @12% of pay on a maximum of Rs.6500/- and under the concept of CTC (cost to company) the  employer is not keen to insist on higher deduction of PF as employees detest any deduction that is not statutorily warranted. Though PF is very much their money that grows with equal contribution from the employer and also with half yearly interest that is not low, the tendency is to have cash in hand and living in the present. The word Provident has the meaning of wise/sagacious and also farseeing/visionary/prophetic but they don’t serve the present and hence not desired.

With this backdrop the Government has now decided to increase the limit from Rs.6500/- to Rs.15000/- This would result in a direct increase of Rs. 1020 in PF both for employee and employer. If CTC is the basis of wage fixation the employee would have Rs.2040/- reduced in take home though this would add up to his PF. Obviously employees in general and those in lower brackets in particular would vehemently oppose this forcing the employer to have a review of the CTC.

By this move the only immediate beneficiary would be the Government which would if all industries remit the additional amount of PF, benefit by a huge chunk of money to augment their resources. Having this PF money in their hand would please employees who would love to spend it on luxuries and comforts treating them as necessities.

Luxury converted to   necessity is lavishness be it a smart phone or a high end bike or any other gadgets that have more magnificence than utility. Though youth is an age of enjoyment, old age is per force  a choice less tenure and one is not sure of what is in store in health, luxury and comfort though responsibilities of self, spouse and children is a guaranteed assignment. Hence it is more important to be prudent with Provident Fund that impulsive with youthful exuberance. It is the responsibility of the State to impress this with their regulations. Corporates today talk of social responsibility as it fetches marketing mileage, but their responsibility towards their own employees is a larger duty. Hence apart from educating employees on the impending amendment to PF rules they also have to think of reviewing pay structure, if required by adjusting the CTC component of employees in the lower bracket of salary. 

Peace, harmony and serenity become inevitable necessities of life after 50 years of age, and financial independence is the source of stability of  one’s mind. Support from relatives and children would be welcome comforts if not luxuries. The PF which if supplemented with Voluntary PF and Public Provident fund would make a perfect corpus for ensuring a life of choice at old age.

Hence the proposed amendment to the PF provision is a windfall in waiting and not a hanging sword.


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