Hike in Benefits under EDLI Scheme

According to latest survey on Employee Provident Fund Organization (EPFO) and National Pension System (NPS), it is seen that NPS has been providing more benefits since last few years. The return amount from NPS is 20% against 8.75% of EPFO. Since long time EPFO has been implementing monopoly rules and regulations, but benefits from NPS bring them under pressure for loosing their PF subscribers to NPS.

The new plan at EPFO V/s. NPS benefits

In order to overcome NPS benefits and to attract more subscribers, EPFO has initiated new insurance plan “Employee’s Deposit Linked Insurance Scheme (EDLI)”, for hiking its deposits along with PF account. “Currently, EDLI has been providing insurance benefits 24 times of the monthly wage and it may be further increased up to 30 times”, PF Commissioner Mr. Jalan said.

Since, there is a higher level of competition, our Finance Minister Mr. Jaitley said that “up to a certain amount of salary EPF or NPS should not be optional and after a certain cap on basic salary, EPF should be optional.”

For example: At present, if an employee has basic salary equal to or less than 6500/-, then PF deduction is compulsory. If an employee has basic salary is equal to 6800/-, then he can go for either NPS or EPF because at this stage EPF is not compulsory.

Also, Mr. Jaitley told that, “Lower scale salaried employees should not suffer from more deductions, in comparison to higher scale salaried employees. “

If there is ESIC amount has been deducting from salary of one employee, then EDLI will be also an additional burden for lower salaried employees. That’s why, For EDLI, employer has to contribute 0.5% on basic pay in order to reduce burden of deduction from employees.

For example: If your total salary is 12000 and your basic salary is 6000/- then your PF deduction will be 12% i.e. 720/- and employer will contribute 0.5% on basic salary amount i.e. 30/-.

Is the EDLI linking up to PF accounts? Can I get any additional bonus facilities?

Yes. The EDLI is linking up to PF accounts. The employees having more than one year service can get 24 times of the monthly average wage of the preceding 12 months and also get a 20% additional bonus.

For example: If you have salary is 12000 and you have done service more than one year along with PF and EDLI subscription , then your insurance covering amount will be 2,88,000/-. If the latest EDLI raising proposal will be approved by Labour ministry, then the EDLI coverage amount will be 30 times of your monthly wages i.e. 3,66,000/-.

Difference between ESIC and EDLI

1. ESIC (Employee State Insurance Corporation) monthly amount has been contributed by both employees (1.75%) and employers (4.75%) since long time. But, EDLI 0.5% is contributed by only employer as per Govt. rule in order to reduce deduction burden from lower scale salaried employees.

Suppose, your basic salary per month is 6200/- and Gross salary is 14700/- per month, then your total ESIC deduction will be as follows:

ESIC Contribution of Employees =14700/- x 1.75%=257.25/-
ESIC Contribution of Employer =14700/- x 4.75%=698.25/-

EDLI contribution of employer will be = 6200/- x 0.5%= 31/-
NO EDLI contribution from Employee.

2. As per ESIC rule, there are several benefits provided to employees such as free medical treatment from the day one of entering into the ESIC policy. Also there are various sickness, disablement wages facilities available for employees as well as dependants in case of death, as per ESIC certificate towards employer.

In case of EDLI, no medical treatment expenses will be provided and only insurance coverage amount 24 times on monthly wages will be provided to nominated beneficiary after death of EDLI member.

3. There are many special facilities for women employees such as maternity wages benefits and additional benefits for complication in maternity. Also there is incentive scheme for disable persons and medical care to retired insured person and his family members by collecting token amount 120/- per month.

In EDLI, there are no special benefits for women employees but only income security for dependants after death will be provided up to a certain period.

4. ESIC account is handled separately but EDLI is linking up to PF account.
5. ESIC is specialized for lower scale salaried less than 15000/- (Gross) per month and above 15000/- ESIC is not applicable. But EDLI can be available along with PF subscription.
6. ESIC will be calculated on Gross Salary of employee when EDLI will be calculated on basic salary of employee.

How much total amount will be contributed from Employee and Employers for PF+EDLI+ESIC?

Suppose, your basic salary is 6500 and Gross Salary is 14900/-, then total deduction will be as follows for PF+ EDLI+ ESIC:

	Employee %	Employer%
A/c No 1: PF contribution Account	12	3.67
A/c No 2: PF Admin account		1.1
A/c No 10: EPF Scheme account		8.33
A/c No 21: EDLIS account		0.5
A/c No 22: EDLIS admin account		0.01
	12	13.61
ESIC	1.75% on Gross	4.75% on Gross

 

Total PF and EDLI Amount will be paid= 6500 *25.61%=1664.65/-.

Total ESIC amount will be paid= 14900*6.5%=968.5/-

Total PF+ESIC contributed by Employee= 6500*12%+14900*1.75%=1040.75

Total PF+EDLI+ ESIC paid by Employer= 6500*13.61%+14900*4.75%=1592.4/-

Hope this article will be useful for you to get knowledge about PF, ESIC and EDLI calculation in India. If you need any more information, please leave your message on comment box.