Insurance scheme for workers to be revamped; wage limit hiked

The Employees Deposit Linked Insurance EDLI scheme provides insurance cover of up to Rs 1.3 lakh to every member of the Employees Provident Fund in case of death before retirement. But with the relatively low life cover under the scheme,employers were allowed to shift to group insurance plans of private companies if the benefits were better compared to the EDLI.

The Employees Provident Fund Organisation,which also manages the EDLI,has now begun a review of the scheme to life insurance scheme to match the benefits provided by private insurers. The issue was taken up at a review meeting of the EPFO earlier this month and a detailed proposal is now being worked out.

The objective is to improve insurance cover to the worker through the already existing EDLI rather than seek help from private schemes. But the financial implication has to be studied. Any extra costs will have to be taken from the employer as the government does not provide towards the EDLI, said an official.

Employers contribute 0.5 per cent of basic pay with a ceiling of Rs 6,500 per month of an employee as insurance premium to the EDLI scheme every month. While earlier,the insurance cover was linked to the PF balance,under the new rules the life cover is the higher of two options: 20 times the average wages of the last one year,with a cap of Rs 1,30,000; or the full amount in the PF account up to Rs 50,000 or 40 per cent of the balance amount.

Consequently,over the past few years,nearly 2,000 companies have chosen to move to group insurance schemes of private players.

Meanwhile,the labour ministry has also hiked the wage ceiling for mandatory health cover and unemployment benefits provided by the Employees State Insurance Corporation ESIC. Employers will now have to deduct 6.5 per cent from a gross salary of Rs 25,000 for ESIC as against the earlier wage limit of Rs 15,000. The decision was taken by labour minister Sis Ram Ola at a meeting of the ESIC earlier this month.