EMPLOYEES PROVIDENT FUND ORGANISATION SOCIAL SECURITY FOR INTERNATIONAL

EMPLOYEES’ PROVIDENT FUND ORGANISATION SOCIAL SECURITY FOR INTERNATIONAL WORKERS 1

The Indian Economic Scenario Ø Due to global demographic pressures coupled with globalization and free market economy, India has witnessed exponential growth in labour mobility. Ø Their most productive phase is spent globe-trotting, necessitating mandatory contributions to social security systems of the host country, often forfeited when they move on before completing eligibility for benefits. Ø To address the social security concerns of such employees, Government of India has negotiated bilateral Social Security Agreements (SSAs) with some countries. 2

Social Security Agreement Being a reciprocal arrangement, SSA Ø ensures equality of treatment at par with the foreign workers Ø eliminates double coverage Ø facilitates counting of contributory periods of service in foreign country Ø facilitates export of benefits 3

Provisions Covered in SSA Three main benefits under SSA Ø Detachment Ø Exportability of Pension Ø Totalisation of Benefits 4

Detachment Ø Employees sent on posting/ secondment to another country exempted from social security contributions in that country Ø Should be complying under the social security system of the home country Ø Period of detachment as stipulated in the Agreement. 5

Exportability of Pension Ø Benefits payable directly without any reduction to the beneficiary choosing to reside in the home country. Ø Benefits also payable directly to the beneficiary choosing to reside in a third country. 6

Totalisation of Benefits Ø Period of contributory service rendered in another country counted for determining eligibility for pension, only for a person not otherwise eligible Ø Calculation of benefit restricted to contributory period of service under the respective social security programme, on pro-rata basis. 7

Employees’ Provident Fund Organisation: EPFO �Largest provider of Social Security in India. �A statutory body under the aegis of the Ministry of Labour & Employment, Government of India. �Implements provisions of the three social security schemes framed under the Employees’ Provident Funds and Miscellaneous Provisions (EPF & MP) Act, 1952. 8

Schemes administered under the EPF & MP Act, 1952 1. Employees’ Provident Funds Scheme, 1952. 2. Employees’ Pension Scheme, 1995. 3. Employees’ Deposit Linked Insurance Scheme, 1976. 9

Role of EPFO in SSA As Competent Agency Issue of Certificates of Coverage to: Ø employees of establishments covered under the EPF & MP Act, 1952; Ø employees of other social security providers like Seamen’s Provident Fund, Banks and Educational Institutions. 10

As Liaison Agency EPFO is the Liaison Agency for other social security providers of the country sending their employees on posting abroad. 11

Eight Operative SSAs Belgium 1 st Sept. 2009 Germany Switzerland 1 st Oct. 2009 29 th Jan. 2011 Denmark Luxembourg France 1 st May 2011 1 st June 2011 1 st July 2011 South Korea Netherlands 1 st Nov. 2011 1 st Dec. 2011 12

Benefits under SSAs Detachme Totalisatio nt n Portability Belgium 5 years √ √ Germany 4 years � � Switzerland 6 years � √ Denmark 5 years √ √ Luxembourg 5 years √ √ France 5 years √ √ South Korea 5 years √ √ Netherlands 5 years � √

SSAs Signed (not yet notified) Hungary Norway Czech Republic Germany (Comprehensive SSA) 14

SSAs: Draft Finalised Canada Quebec Austria Sweden Finland Portugal 15

SSA Negotiations in progress Australia Japan 16

Special Provisions for International Workers (IWs) • Enabling provisions for IWs have been introduced in Para 83 of the Employees’ Provident Funds Scheme, 1952 and Para 43 -A of Employees’ Pension Scheme, 1995 effective October 1, 2008. • Further amendments to these Special Provisions have been notified effective September 11, 2010. 17

Special Provisions Include Ø Definition of International Worker Ø Applicability Ø Contributions on full pay (no ceiling) Ø Benefits available to International Worker 18

Definition : International Worker Ø An Indian employee having worked or going to work in a country having SSA with India and being eligible for the social security benefits of that country Ø An employee holding other than Indian passport, working for a covered establishment in India 19

Applicability Every IW employed in a covered establishment with effect from 1. 10. 2008, other than an excluded employee, shall be required to become a member. 20

Contributions on Full pay ØThere is no pay ceiling for an IW, hence contribution is made on Full Pay by both employer and employee ØContributions on total pay, regardless of where it is paid (India or abroad or split payroll) 21

Monthly Pay for Calculating Contributions The pay as defined under Para 29 of the EPF Scheme, 1952, includes: üBasic wages üDearness allowance üRetaining allowance üCash value of any food concession 22

IWs : Benefits under EPF ØFinal withdrawal : i) To member - on retirement & attaining the age of 58 yrs. - on retirement on permanent disability due to bodily or mental infirmity (includes TB, leprosy and cancer) - on the grounds as specified in the SSA ii) To survivor(s), on death of the member ØPartial withdrawals/advances : for housing, marriage, hospitalisation, education, etc. 23

IW : Entitlement under EPS Ø Pension Payment for life on Retirement/ Superannuation. Ø Pension Payment for life on disablement during employment. Ø Withdrawal benefit (for service less than 10 years after totalisation) only for members covered under SSA Ø Exportability and totalisation of benefits as per the SSA. 24

September 2010 amendment: Key Changes Ø PF final withdrawal not before 58 years of age, unless provided in SSA Ø Payable only in an Indian bank account, or as per the terms of SSA ØPension contribution on full pay Ø Withdrawal benefit under EPS 1995 only to those covered under SSA 25