Labour ministry to propose hike in wage limit for provident fund

With minimum wages in most states higher than the wage limit for the EPF,there is an urgent need for a review. We are very keen to increase to the wage cap to least Rs 10,000,if not Rs 15,000, said a senior labour ministry official but added that the final call will have to be taken by the finance ministry.

The labour ministry is likely to call a meeting of the EPFOs apex decision making body the Central Board of Trustees (CBT) later this month to take forward the proposal.

Currently,24 per cent of a workers salary up to a ceiling of Rs 6,500 per month is mandatorily deposited with the EPFO. The wage ceiling,which was set in 2001,has pushed a large number of workers out of the PF net,depriving them of much-needed social security benefits. Until now,the finance ministry has resisted a hike in the wage ceiling for the EPF as its subsidy payout for the Employees Pension Scheme (EPS) will have to increase.

According to estimates,the subsidy on the EPS will have to rise to Rs 3,000 crore annually from the current Rs 1,100 crore,if the wage limit for PF is hiked to Rs 15,000 per month. Significantly,the wage ceiling for the related Employees State Insurance Corporation Scheme was hiked to Rs 25,000 per month last month from the earlier cap of Rs 15,000.

But the decision on the interest rate for PF contributions in 2013-14 could be taken early next year. Calculations are yet to be finalised. Further with assembly elections scheduled later this year,we will have to wait till January to decide on the interest rate, said the official,adding that the proposal is unlikely to be taken up by the CBT now.

The EPFO had announced an interest rate of 8.5 per cent for its subscribers in 2012-13,marginally higher than the 8.25 per cent paid in 2011-12.

Although the retirement fund manager is yet to finalise its estimates,sources said that the return in the current fiscal could be partially higher due to hardening yields on government bonds.

SOCIAL SECURITY

* Currently,24% of a workers salary up to a ceiling of R6,500 per month is mandatorily deposited with the EPFO

* The wage ceiling set in 2001 has pushed out a large number of workers out of the PF net

* The finance ministry has resisted a hike in the wage ceiling as its subsidy payout for the Employees Pension Scheme would increase

* Estimates say the subsidy would rise to R3,000 crore if the wage ceiling is set at R15,000

India to have 3.02 lakh millionaires by 2018

The number of millionaires in the country is expected to jump by over 66 per cent from 1.82 lakh at 3.02 lakh by 2018,even as 94 per cent of Indias population has wealth below $10,000,according to the fourth Annual Global Wealth Report 2013 released by Credit Suisse Research Institute.

Figure it out

* Wealth in India rises by 7.4% to $ 3.6 trillion in mid-2013.

* Wealth per adult rose from $2,036 in 2000 to $4,700 in 2013,an average annual rate of 8%.

* Just 0.4% of the population has net worth over $100,000. However,due to Indias large population,this translates into 2.8 million people.

* India has 2,54,000 members of the top 1% of global wealth holders,which equates to a 0.5% share.

* Wealth per adult is expected to rise at a CAGR of 9.3% to $6,600 by 2018.

Number of millionaires in 2013 and 2018 (in thousand)

Country 2013 2018 Change

(%)

USA 13,216 18,618 41%

Japan 2,655 4,920 85%

France 2,211 3,224 46%

Germany 1,735 2,537 46%

UK 1,529 2,377 55%

China 1,123 2,112 88%

Australia 1,123 1,666 48%

South Korea 251 449 79%

Brazil 221 407 84%

Mexico 186 273 47%

India 182 302 66%

Singapore 174 235 35%

Top 10 countries with highest average wealth per adult in mid-2013 (in $ )

Country Average Change since wealth per adult mid-2012(%)

Switzerland 5,13,000 6.1%

Australia 4,03,000 1.3%

Norway 3,80,000 9.0%

Luxembourg 3,15,000 5.4%

USA 3,01,000 11.4%

Sweden 2,99,000 14.6%

France 2,96,000 8.2%

Singapore 2,82,000 6.8%

Belgium 2,56,000 8.7%

Denmark 2,55,000 10.1%