EPFO backs raising retirement age to ease pressure on pension funds.
India is projected to become an ageing society by 2047 with an estimated 140 million people above the age of 60 years.
This is expected to put immense pressure on the pension funds in the country.
The Employees’ Provident Fund Organisation (EPFO) sees a case for substantially in increasing the retirement age in India and aligning it with life expectancy to ensure the viability of the pension system in the country and provide adequate retirement benefits
“Increasing the retirement age, going forward, could be considered in line with the experience of other countries and will be key to the viability of pension systems,” EPFO said in its Vision 2047 document.
“Raising the retirement age would mean deposit of higher quantum pensions for longer duration with EPFO and other pension funds in the country and will help offset inflation,” a senior government official told ET, explaining the suggestion.
The vision document has been shared with the states and discussions will soon start with other stakeholders including the employers and the employees as well.
EPFO is the custodian of a cumulative pension and provident fund corpus of over ₹12 lakh crore of its nearly 60 million subscribers. The EPFO is likely to rope in the Pension Fund Regulatory and Development Authority, which administers the National Pension Scheme of the government, in this comprehensive plan.
Labour economist KR Shyam Sundar said the move will have mixed impact. “It will ensure that the family income of aged workers sustain the aggregate demand and provide growth impetus, while also saving the age discrimination present in the labour market today,” he said,
“But on a net basis, raising the retirement age in a demand constrained economy may not prove to be efficient and equitable as it will keep the youth waiting for a longer period to get a job and there will be skill wastage,” Sundar added.
India’s elderly population (aged 60 and above) is projected to touch 194 million in 2031 from 138 million in 2021, a 41% increase over a decade lifted by a higher population and rise in life expectancy for both males and females according to the National Statistical Office (NSO)’s Elderly in India 2021 Report.
“Consequently, the number of people requiring old age income and health security will go up exponentially,” EPFO added.
In India, the retirement age varies between 58 to 65 years depending on whether it is a public sector enterprise or a corporate entity. However, across the European Union, the retirement age is 65 years, while it is 67 in Denmark, Italy and Greece, and 66 in the US. Most of them have an ageing population.
The Organisation for Economic Cooperation and Development in the 2012 edition of its ‘Pension Outlook’ said governments will need to raise retirement ages gradually to address increasing life expectancy in order to ensure that their national pension systems are both affordable and adequate.
Read MorePrivate school teachers entitled to gratuity: Supreme Court.
Upholding a 2009 amendment to the Payment of Gratuity Act, 1972, the Supreme Court has ruled that the benefit of gratuity would extend to teachers, including those employed in private schools. “The amendment with retrospective effect remedies the injustice and discrimination suffered by
the teachers on account of a legislative mistake, which was understood after
the pronouncement of the judgment in Ahmedabad Private Primary Teachers’
Association. The amendment was necessary to ensure that something which was due and payable to the teachers is not denied to them due to a defect in the
statute,” a Bench led by Justice Sanjiv Khanna said.
How can we get more women in the boardroom?
We have made significant strides towards gender equality in the last couple of decades.
However, despite this progress, women are underrepresented in
the higher echelons of the corporate world. According to the Deloitte Global
Boardroom Programme’s Seventh Edition of the ‘Women in the boardroom: A
global perspective’ Report, women hold an abysmal 3.6% of board chairs in
the country. Yet, more equitable representation of women on boards is
necessary to both foster gender equality as an important societal goal and also for business reasons. Research in management finds that gender-diverse
boards have a wider range of unique competencies and help firms create more novel, impactful innovations, gain better access to new markets since they better represent their stakeholders, improve governance through better
advisory quality, and improve women’s opportunities and motivations to
participate in the labour market
‘There will be blood on streets,’ Google execs warn employees about layoffs
As Big Tech companies begin to lay off employees, Google executives have reportedly warned workers to either boost performance or prepare to leave as “there will be blood on the streets”
As Big Tech companies
begin to lay off employees in the global economic downturn, Google
executives have reportedly warned workers to either boost performance or prepare to leave as “there will be blood on the streets” if the next quarterly earnings are not good.
In a company message viewed by Insider, Google
Cloud sales leadership has threatened employees with an “overall examination of sales productivity and productivity in general” and that if next quarter results “don’t look up, there will be blood on the streets.”
If third quarter results “don’t look up, [then] there will be blood on the streets,” according to a message conveyed to the sales team. The warning was first reported by Insider.
Google employees are “fearful of layoffs” after the company quietly extended its hiring freeze this month without making an announcement, reports The New York Post.
The company has now reportedly warned employees with layoffs if they don’t produce results.
Alphabet and Google CEO Sundar Pichai told employees late last month that they must improve productivity due to fierce economic headwinds.
Pichai said that he wanted to solicit ideas from his employees on how to get “better results faster.”
“There are real concerns that our productivity as a whole is not where it needs to be for the head count we have,” he was quoted as saying.
Google in July put a freeze on hiring for two weeks to review its headcount needs and decide on future course of action. The company earlier announced to slow down hirings for the rest of the year.
According to Pichai, “it’s clear we are facing a challenging macro environment with more uncertainty ahead”.
Alphabet, the parent company of Google, reported weaker-than-expected earnings and revenue for the April-June period (Q2).
Revenue growth slowed to 13 per cent from 62 per cent in the same quarter last year.
Other tech companies that have either laid off employees or slowed hiring in the current economic downturn include LinkedIn, Meta, Oracle, Twitter, Nvidia, Snap, Uber, Spotify, Intel and Salesforce, among others.
Read MoreWhat is this all about Pension Scheme and its pending matter before the Apex Court
1. Now the hearing and argument of both the parties that is 67 Petitioners and Respondent, EPFO is over and SC has reserved its judgment.
2. The appeal was filed by EPFO challenging the Kerala, Rajasthan & Delhi High Court judgments which had quashed the EPS (Amendment) Scheme of 2014 restricting EPS membership for the employees whose Basic salary is upto Rs. 15,000/- pm.
3. In 2018, the Kerala HC, while setting aside the Employees’ Pension (Amendment) Scheme, 2014 allowed paying Pension in proportion to the salary above the threshold limit of Rs. 15,000/- pm. The HC also held that there can be no cut-off date for joining the Pension Scheme.
4. In 2019, the SC had dismissed the Special Leave Petition filed by the EPFO against the Kerala HC judgment. Later, in review sought by the EPFO & Union Govt., the dismissal of the SLP was recalled and the matter was reopened for hearing on merits.
5. In August 2021, a 2 Judge Bench of the SC had referred the appeals to a 3 Judge Bench to consider the following two issues;
A. Whether there would be cut off date under paragraph 11(3) of the EPS and
B. Whether the decision in R.C. Gupta vs. RPFC (2016) would be the governing principle on the basis of which all these matters must be disposed.
6. The main argument raised by the EPFO is that the Pension Fund and Provident Fund are distinct and the membership in the latter will not automatically translate into the membership of the former. It was argued that Pension Scheme is intended for low-age employees and if the person drawing salaries above the cut off limit are allowed to draw pension as well, then it will create huge imbalance within the fund. The 2014 amendments were brought to address the issue of cross-subsidization between the Pension and Provident Funds.
7. The Pensioners disputed the argument of financial burden raised by the EPFO. It was argued by them that the corpus fund remains intact and the payments have been made from the interest. The Pensioners also disputed the argument of the EPFO that there has to be separate option exercised within the cut off period to join the Pension Scheme and contended that the stand of EPFO is contrary to the statute.
8. Detailed reports of the hearing of different days are given below;
A. EPFO tells SC that PF Members do not automatically become eligible under EPS.
B. SC asks Centre & EPFO to show materials on cross subsidy and finacial burden.
C. While countering the argument of the EPFO, the Pensioners tell SC that there is no deficit in Pension Fund.
D. Pensioners argue that they can not be asked to contribute 1.16% of salaries above Rs. 15,000/-.
E. Pensioners tell the SC that Pension corpus remains intact, payments come from interest and EPFO can not raise fund issue.
F. SC asked Govt. & EPFO why Annual Reports do not reflect potential financial burden that would befall the Govt if Pensioners are allowed to opt for the EPS retrospectively and beyond Rs. 15,000/- wage limit.
Finally after the 6 days hearing from both the parties a 3 Judge bench comprising J. Uday Umesh Lalit, J. Aniruddha Bose & J Sudhanshu Dhulia reserved judgment.
Read MoreWhen Crisis Led To Consumer Safety: The Story Of Cadbury & Roll of HR
A key learning from this episode is that a food and beverage company’s
responsibility of product quality and safety does not end with the product
leaving its factory. It continues till the product is consumed by the
end-consumer. Hence, any product quality or consumer safety loopholes in the total value chain should be mapped and proactively addressed by the company.
The roll of HR does not end just by focussing on safety and security
measures installed at the factory but also to create confidence in the
employees to face such challenges, if arises and take abundant precaution to
preserve brand name and by way of effective communication at all levels of
manufacturing including third party manufacturing facilities and adopt
robust audit trail.
In the last quarter of 2003, just around the festival of Deepavali, some
television channels flashed ‘breaking news’ – ‘Insects found in Cadbury’s
chocolates’. Around the turn of the millennium, the era of 24X7 news
channels had set in. This was one of the first occasions when such an
established food brand was in the news for all the wrong reasons. Chocolate being kids’ favourite, and Cadbury being the market leader, the news created
immense concern among parents. When the safety of an established food
product is publicly doubted, it can create a crisis for the company. Indeed, consumers were deeply impacted, and Cadbury’s business was severely affected. So, did Cadbury’s chocolates really have insects in them? Was a
multinational company established in 1824 in England no longer trustworthy?
Genesis of the Crisis
Every crisis has two sides of the story. Let me present both. While the media claimed that several customers found insects in Cadbury’s chocolates,
the Cadbury’s Chairman shared the company’s version. A certain shop keeper in Mumbai who had apparently found an insect in a bar of Cadbury’s chocolate
was the source of the crisis. The company believed that the bar may have been stored next to some flour or grains and the insect(s) might have crept
into it. Instead of raising the matter with the company, the shopkeeper
decided to make the matter public. Supposedly, the root of the problem was
the shopkeeper’s disgruntlement with Cadbury. He had some personal
grievances with the company staff about insufficient stocks and felt that
this was the way to express his displeasure. So, he registered a complaint
with the health inspector in the Government of Maharashtra. Well, I am not at sure about this story not favouring the stand taken by the Company on
this issue.
The October 6, 2003 Food and Drug Administration (FDA) Dept.’s Lab report on ‘insect infestations’ in the Cadbury chocolate bar was positive for the presence of two dead and one live insect.
Consequently, the relevant authorities called a press conference and blew up the whole issue before the media. FDA had already seized the chocolate stocks from Cadbury’s Talegaon
plant. In its defence, the company released an elaborate clarification
statement underscoring the high-quality manufacturing processes followed at its plants, and that the poor storage at the retailer’s end was responsible
for the reported case of worms in its chocolates. The FDA did not buy the
argument and blamed the company for its poor packaging, which it believed
was part of the manufacturing process. In the argument and counter argument
between the government agencies and Cadbury that followed, the latter lost sales to the tune of nearly 45 percent at the peak of the festival season.
Proactive Crisis Management
A crisis of this magnitude has the power to threaten the existence of a
food company. Readers would recollect the recent case (May 2015) of Maggi Noodles when it was reported that the noodles had up to 17 times the
permissible limit of lead content. This was followed by a nationwide ban on
Maggi’s noodle products. It was a quarter later, in August 2015, when the Bombay High Court struck down the ban and questioned the procedure followed
during the original tests.
In Cadbury’s case, the fight was fought not in the legal courts but in the
people’s court. At stake was the trust of three crore consumers who bought the company’s products every month giving it a 70 percent market share. To revive this eroded trust in the Cadbury brand and the safety of its products, the company decided on a multi-pronged strategy to bounce back with ‘Project Vishwas’.
Pivotal roll played by HR….
Building confidence of the employees, workers, contractual staff in its product including *the workers of third *party *manufacturers and *entire supply
chain by way of education, effective communication, study tours since if the staff also loose the trust in their own products, then it will be disaster for the organisation. No doubt consumer education, marketing strategy and quality check at each and every stage of the manufacturing, packing, delivery and storing was enhanced and escalated to achieve desired goals.
Consumer Education
One of the key elements of Cadbury’s crisis management strategy was
consumer education. Under Project Vishwas, it engaged with over 1,90,000 retailers that sold its products. The company proactively underscored
Cadbury’s health conscious identity, and invited people to come and see its
factories. When interested people came, including media, parents, and
students, they were exposed to the rigorous system of quality checking
followed on the premises before the products left the factory premises. The observers were convinced that there was nothing wrong in the manufacturing
process and the factory ecosystem. The problem arose after the product left
the factory. This helped convince customers and the media to some extent.
New Packaging
Having come face-to-face with a major crisis, Cadbury did not want to take
any chances with consumer safety. It wanted to ring fence itself against likely problems in its wholesale and retail supply chain.
Earlier, a Cadbury’s Dairy Milk bar used to be wrapped in a foil wrap, which was not sealed. The unsealed foil wrap was packed inside a paper which was open on both sides. This left the product vulnerable to mischief and mishandling.
Cadbury decided to revamp the packaging of all its chocolate products.
Through extensive discussions, it was decided that metallic poly-flow
packaging would be most suitable to protect the product by completely
sealing it. This nullified any chance of mismanagement at the retailer’s
end. At a cost of over ₹15 crores, Cadbury imported machines that could heat seal the foil and achieve high standards of improvised packaging. This
process also increased the cost of the product by about 15 percent. However,
the company decided to absorb this expense, and did not hike the price of its chocolates.
Cadbury’s Chairman Pal underscored the company’s conviction that the
product must reach the consumer in the right condition, and if this costs
additional money and substantial investment, it should be done.
Constant Communication
The highlight of Cadbury’s crisis management strategy was constant
communication with the masses using the same platform that accentuated the crisis – media. In the consumers’ minds the image of Cadbury’s chocolates
had been tarnished. It was natural for any parent to suggest to their
children not to buy Cadbury’s chocolates. I recollect another crisis the company had faced a decade earlier when a Lucknow-based scientist claimed that his research revealed that there was ‘nickel’ in Cadbury’s
chocolates. While the impact of media in 1993 wasn’t as loud as the 24X7
media of 2003. Yet, I remember my mother advising me (then studying in
middle school) not to buy Cadbury’s chocolates! Parents are the biggest
stakeholder in the purchase of products meant for kids. Cadbury had to address this vital stakeholder to win their confidence. In the first quarter
of 2004, Cadbury increased its advertisement spending by over 15 percent. It roped in Bollywood superstar Amitabh Bachchan
as its new brand ambassador. The immense popularity he enjoyed with the
Indian masses helped the brand. His deep sonorous voice helped reassure the
masses of the renewed measures taken by Cadbury for their and their kids’ safety and wellbeing. The outcome was slow yet positive. After six months of
efforts, the demand for Cadbury’s chocolates started becoming normal.
Key Learnings
The consumers gave Cadbury another chance. Market studies indicated that
consumers eventually considered the incident as a lapse and not an
intentional betrayal of trust to harm consumers.
Interestingly, public
memory is short; especially for products that enjoy a strong emotional
connect with target consumers. Cadbury’s chocolates had been a favourite
since 1948 when its products first became available in India.
Nearly two decades later, hardly anyone recollects that Cadbury faced a
crisis with its core and most popular product. However, in the current
scenario of managing risks and averting crises, Cadbury’s approach of addressing the crisis with a multi-pronged strategy deserves a mention and
emulation. Some marketing and PR experts hold the company partly responsible for ignoring the risk to product safety due to inadequate packaging, which
could have been proactively addressed much ahead of time, thereby avoiding a
crisis with deep financial and brand ramifications. Is it desirable for
companies to take such avoidable risks till a crisis emerges? In fact, the best way to avert crises, is to proactively address risks that could cause a crisis.
Thus, I repeat, the key learning from this episode is that a food and beverage company’s responsibility of product quality and safety does not end
with the product leaving its factory. It continues till the product is
consumed by the end-consumer.
Hence, any product quality or consumer safety loopholes in the total value chain should be mapped and proactively
addressed by the company.
Pension at higher rate – Order reserved by Supreme Court
Arguments on the 67 Employees’ Pension Scheme petitions in the Supreme Court were finally concluded on 10.8.2022. Every member of Employees’ Provident Fund (with inbuilt pension scheme) is expecting higher pension rate which has been held by Kerala High Court. If the judgment of Kerala High Court upheld the pensioner will be benefited with higher pension rate.
How and to what extent the benefit of higher pension will accrued can be understood that one Mr. Parveen Kohli a retired employee of Haryana Tourism Ltd. whose pension was sanctioned for Rs.2,372 per month but in view of his higher salary it was increased to Rs.30,592 per month. Let us wait for favourable judgment.
Read MoreEPFO’s investments value rises to ₹2.26 lakh cr in ETF during FY22
The notional value of Employees’ Provident Fund Organisation (EPFO)
investment in Exchange Traded Funds (ETFs) has reached to ₹2,26,919.18 crore
against the investment of ₹1,59,299.46 crore as of March 31, 2022.
The EPFO’s investments have skyrocketed by a breath-taking 265.63% from the
investment of FY21.
Notably, the statutory body has been investing in ETFs since August 2015.
Read MoreWHERE THE REVENUE STAMP IS REQUIRED TO BE AFFIXED?
A revenue Stamp can be explained as a receipt given by the Government in the form of small adhesive stamp in lieu of separate document stating that the tax/fee has been paid to the Government. The receipt for above certain amount shall be mandatorily acknowledged by the receiver affixing and cancelling the revenue stamp. Under section 30 of Indian Stamp Acts 1899, the recipient of above Rs.5000/-, shall mandatorily acknowledge the payment with a receipt affixing one Rupee revenue stamp on it as a proof of payment.
Refusal to give such receipt with a discharged revenue stamp, may lead to
punishment of with a fine of Rs. 100/- as per section 65 of stamp act.
As per Section 3 of Indian Stamp Act, certain receipts/instruments and other documents are required be affixed with revenue stamp. The section 2(23*) in of Indian Stamp Act, 1899 defines ‘Receipt’ as under.
“Receipt” includes any note, memorandum or writing-
(a) Whereby any money, or any bill of exchange, cheque or promissory note is acknowledged to have been received, or
(b) Whereby any other movable property is acknowledged to have been received
in satisfaction of a debt, or
(c) Whereby any debt or demand, or any part of a debt or demand, is
acknowledged to have been satisfied or discharged, or;
(d) Which signifies or imports any such acknowledgment, and whether the
same is or is not signed with the name of any person
One-rupee stamp is required to be affixed on any receipt, the amount or value of which exceeds Rs 5,000 (earlier Rs.500/-). This amendment has come w.e.f. 10.09.04. The stamp is required to be affixed in respect of receipt which has been defined as under in Section 2(23) of the Stamp Act.
In sale transactions deeds, payment of consideration is established by
annexing to the deed a revenue stamp affixed receipt (of advance payment(s)
or final payments). Besides stamping of receipts for payment considerations,
main documents like Demand Promissory Notes (Pro-notes/DPN), acknowledgement
of debts/ Revival Letters (RL) when affixed with proper revenue stamps are
admitted in the Courts as prima facie evidence.
Nevertheless, to get such instruments/documents admitted as evidence of payments, it is important to
effectively cancel the revenue stamps before or at the time of execution of
document. The best way of cancellation of revenue stamp is by sign over all
the stamps in such a manner that signature extends even beyond the stamps.
However, no need to affix revenue stamps for the receipts on withdrawals
from bank account, as they are not in the nature of receipts defined under Indian Stamp Act 1899.
Very interesting Case Law of Kerala HC in the matter of Dr. Jaikish Jayraj vs. The RPFC (1) and Another
On the basis of the report of the Enforcement Officer (EO), the EPF
Authority issued notice to employer to deposit the assessed amount –
Petitioner has challenged that notice in Writ Petition – Held, Respondent
have submitted that sit is a preliminary Notice and thereafter the Summons will be issued and a regular enquiry under section 7A would be initiated by
giving an opportunity to the Petitioner t reply – Held, Respondents that is EPF Authorities should not have used the language as indicated in the Notice since it indicate that no opportunity to the Petitioner to submit his
defence is given – EPF Authorities are supposed to not issue notices in a
mechanical and stereotype manner – An opportunity for initiating the
proceedings under section 7A of the Act has to be given in accordance with
Law.”
The notice issued by the EPF Authorities was as under;
“It is seen that you have not yet remitted the statutory dues for the period
from Nov, 2018 onwards in respective heads of accounts as required under EPF
Scheme, 1952.
You have thus violated the mandatory provisions of the Act and the Scheme
and have rendered yourself liable for penal action under section 14 of the
EPF & MP Act, 1952.
In this regard the EO had already issued Part II of the Inspection Report to
you (Copy Enclosed). But it is noticed that you have not remitted the dues for the period from Nov, 2018 onwards. As such you have rendered yourself
liable for penal action;
Held by the Kerala HC as under;
“By looking at the language of notice, it does not give any opportunity to
the Petitioner to reply and support there case by relying upon the statement
being accepted. The EO and APFC are supposed to not issue the notice in
mechanical and stereotype manner. An opportunity for initiating the
proceedings under section 7A of 1952 Act has to be in accordance with Law.
By taking the statement on record of the Respondents, I do not intent to
interfere in the Writ Petition. With the aforementioned observations, the WP is disposed of.”