Government continues to flirt with EPF subscribers. After the flip-flop on EPF taxation and withdrawals, the Government had attracted public wrath for challenging the Labour Ministry’s decision of the 8.8% interest pay-out to EPF subscribers for Financial Year (FY) 2105-16. It seems the Government has realised, sooner rather than later, that over five crore people (subscribers of EPF) are unhappy with its recent attempts of pruning one of the few social security schemes accessible to organised workmen.

Turning 180 degrees, the Government is now (day) dreaming about submitting up one more proposal for the subscribers of Employee Provident Fund (EPF).

Dear readers, you need not worry this time. The Government is not going to take away any of your benefits. On the contrary, it’s trying to grant some concessions to EPF subscribers. However, PersonalFN believes this is another scheme from the Government, which appears to be impractical to implement and sustain successfully on the large scale for a long time.

Let’s understand what led PersonalFN conclude that
The proposed scheme endeavours to grant advances to the PF subscribers from their accumulations and would also allow them to pledge their future contributions for paying Equated Monthly Instalments (EMIs). Puzzled?

Here’s the clarification
Affordable Housing for EPF subscribers is the new motto of the Labour Ministry. The Minister was being asked if the Government or the Employees’ Provident Fund Organisation (EPFO) was considering a scheme of allowing subscribers to pledge their future contributions for buying a house.

While replying to a question in the Lok Sabha, Bandaru Dattatreya stated, “Government is exploring the possibility for providing a suitable low-cost housing scheme for subscribers of Employees' Pension Fund.” He also added that “It is in preliminary discussion stage.”

Last year, the trustees of EPFO had discussed a possibility of coming out with a scheme allowing its subscribers to purchase an affordable home by pledging their future PF contributions. An expert committee on housing facility had presented its report to the trustees of EPFO for perusal.

The said scheme will be based on the three-party agreement where the subscriber and a banking or housing finance institution along with EPFO would be the parties to the contract. The core of the scheme is this—the EPF subscriber will buy a low-cost house with the funds borrowed from the bank or the housing finance company. Simultaneously, EPFO will assure the bank of releasing the PF accumulations of the subscriber as EMIs. As a routine, the property will be pledged with the financing company.

Lastly, there was one more suggestion...
The Committee of EPFO had recommended that the schemes should be made available only to those subscribers who were unable to buy a house throughout their working span.

What to expect?
Prima facie, the Government wants to address the concerns of the salaried employees who believe their income is inadequate to buy them a house in their lifetime. The real question is who’s going to find them an affordable home? Housing is the basic need, but encouraging people to buy a house with retirement savings wouldn’t be an intelligent decision. Will the monthly EPF contributions suffice to pay EMIs is another question and the important one as well.

Smart cities, affordable housing, and all similar schemes look very promising, unfortunately, only on paper. This is the grim reality—despite the piling inventory, home prices are still sky high.

Address the real problem...
Rotten eggs stink and the foul odour lets everybody know who is in the possession of them. The same goes for black money—a culprit of unrealistic real estate prices but the Government is beating around the bush. Who’s responsible if the EPF subscriber retires with no money in his pocket? Will he have to sell his “affordable house” to survive the ‘golden’ years?

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Do you think the proposed scheme of the Government for EPF subscribers is workable? Feel free to share your comments here

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