Contents | Q NOTES | 3rd National Quality Conclave | Speakers | Augment Quality in service sector | D. L. Shah | Improving public services | Quality Awards | Sevottam drives | Posting a Quality show | Metro meteoric rise | India speaks | Quality initiative | CBDT revamps | Enhanced Quality services for better social security | Making Customs and Excise people-friendly | Revolutionising Corporate Governance | Charter for prompt public delivery system | Railways: Not world class but getting better | Topping in Quality and value-based education | Standard for Quality School Governance | NABH to standardise blood banks | Quality standard of Delhi’s Government hospitals | IASQM | EIA CONSULTANT ORGANISATION | Capital Info
Enhanced Quality services for better social security
The Employees' Provident Fund Organisation in the country is one of the 10 government departments where Sevottam is currently under implementation. With a view to improve the efficiency and Quality of services, Sevottam will bring in better social security services


he Employees’ Provident Fund Organisation is one of the largest provident fund institutions in the world in terms of members and volume of financial transactions. The total financial corpus managed by the EPFO is in excess of Rs 2 lakh crore ($45 billion) and there are a total of about 40 million contributing and non-contributing members in about 450000 covered establishments.

The membership of EPFO is compulsory for employees in establishments coming under the purview of the statute. As per provisions in force, almost any establishment in India is required to have a registration with the basic qualifying criterion being employment of 20 or more persons. Contribution is at present 12 per cent employee’s share and the employer’s share totaling 13.61 per cent of the wages of the employees. Among the many benefits offered in addition to the compulsory Provident Fund (where the present rate of interest is 8.5 per cent) are: service pension on retirement, death or disablement and a lump sum insurance payout in case of death of the member, to his nominee/ family.

“We are keen to modernise the Employees' Provident Fund Organisation. The EPFO's Central Board of Trustees has a technical committee for monitoring key projects and for introducing holistic reforms. The business process reengineering exercise is a major step towards pushing significant projects forward speedily and for resolving existing stalemates, if any.”
— Secretary, Labour and Employment, Government of India

By all accounts, social security has always been one of the key components of labour welfare. Theoretically, labour welfare refers to all such services, amenities and facilities to the employees that improve both their working conditions as well as their standard of living. Social security benefits provided by an enterprise should protect not only their employees, but also their family members through financial security, including health care. Social security envisages that the employees shall be protected against all types of social risks that may cause undue hardships to them in fulfilling their basic needs.

In India, provision for social security to the workers occupies a very significant place in the industrial set-up. It is included in our Constitution under the Directive Principles of the State Policy. It thus makes the ‘State’ bear the primary responsibility for developing an appropriate system to protect and assist its workforce. Hence, a Social Security Division has been set up under the Ministry of Labour and Employment. The division deals with framing of social security policy for workers, administration of all the legislations relating to social security and implementation of the various social security schemes. Social Security to the workers is provided through the five Central Acts, namely:

  1. The Employees’ State Insurance Act, 1948
  2. Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
  3. The Workmens’ Compensation Act
  4. The Maternity Benefit Act

The Payment of Gratuity Act. Additionally, there are also a large number of welfare funds for certain specified segments of workers such as beedi workers, cine workers, construction workers, etc.

The social security package broadly covers two categories of labour welfare measures:- (i) those relating to the medical facilities, compensation benefits and insurance coverage to the employees, and; (ii) those relating to the provident fund and gratuity provisions. It thus consists of all types of preventive, promotional and protective measures for labour welfare.

With the view to providing effective social security benefits to the employees, the Employees’ Provident Fund Organisation (EPFO) was established in the year 1952, consequent to the enactment of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. The Organisation is administered by the Central Board of Trustees, comprising representatives of the Government of India, provincial governments, employers and employees. The Board is chaired by the Union Labour Minister of India. Both, the Chief Executive of the EPFO as well as the Central Provident Fund Commissioner, report to the Union Labour Minister through the Permanent Secretary in the ministry.

The Constitution of India, under “Directive Principles of State Policy”, provides that the state shall, within the limits of its economic capacity, make effective provision for securing the right to work, education and public assistance in cases of unemployment, old-age, sickness and disablement. The EPF & MP Act, 1952 was enacted by Parliament and came into force with effect from March 14, 1952, as part of a series of legislative interventions made in this direction. Presently, the following three schemes are in operation under the Act:

  • Employees’ Provident Fund Scheme, 1952
  • Employees’ Deposit Linked Insurance Scheme, 1976
  • Employees’ Pension Scheme, 1995 (replacing the Employees’ Family Pension Scheme, 1971)

“We have always been keen on initiatives to transform EPFO into a top-class provider of social security benefits to its four crore members. Further, we staunchly believe in exercises aimed at reinventing EPF India. Sometime back, EPFO tied with XLRI Jamshedpur for implementing a new business model as part of the revamp mission or Business Process Restructuring (BPR) programme for integrating the organisation's human resources."”
— Central Provident Fund Commissioner, Employees' Provident Fund Organisation

The EPFO has the dual role of being the service provider to the members as well as the enforcement agency to oversee the implementation of the EPF & MP Act throughout the country. To this end, the Commissioners of the Organisation are vested with enormous powers under the statute conferring quasi-judicial authority for search and seizure of records, assessment of financial liability on the employer, levy of damages, attachment and auction of a defaulter’s property, prosecution and arrest and detention in civil prison.

Administratively, the organisation is structured into four zones at Delhi, Bombay, Kolkata and Chennai, each of which is headed by an Additional Central Provident Fund Commissioner. The zones are divided into regions headed by Regional PF Commissioners, which are further sub-divided into sub-regions headed by junior grade Regional PF Commissioners or Assistant Commissioners. Most of the districts in the country have small district offices where an Enforcement Officer is stationed to inspect the local establishments and attend to member/ employer grievances.

The total manpower of the EPFO is at present around 20000, including all levels. The Commissioner cadre numbering 650 are recruited directly, competitively, through the Union Public Service Commission of India as well as through promotion from lower ranks. Subordinate Officers (Enforcement Officers/ Accounts Officers) are also recruited directly in addition to promotion from the staff cadre of social security assistants.

It should be noted that EPFO is one of the 10 government departments, identified on the basis of large public interface, where Sevottam is currently under implementation. The Action Plan to implement Sevottam within a period of two years has been received directly from the PMO. This has been done to improve the efficiency and Quality of services.

The Sevottam framework takes note of best-inclass practices across the world, like the UK Charter Mark, the US Business Excellence Model and the Malcolm Baldrige National Quality Award, European Foundation for Quality Management Framework, as well as ISO 9000 series of standards and yet remains grounded in Indian realities. The Capability Maturity models and Six-Sigma techniques have also been interwoven into the framework to create a mechanism that is truly world class and yet simple enough to be taken up by a wide variety of government organisations. Based on the model, the Bureau of Indian Standards (BIS) has developed a Quality standard for Public Service Quality Management Systems, Indian Standard IS: 15700:2005, a first of its kind in the world.

For achieving this, a core group has been set up in the organisation to drive the initiative across different levels. This Core Group is likely to be the focal point for developing department specific standard of service delivery as well as for deciding and implementing steps required to gradually achieve ‘excellence’. It is expected that this new initiative will not only enhance the Quality of EPFOs’ services, but also help improve its fund management.

Surely, all this seems to be paving the way to a bright new era for EPFO!

Towards Quality benefits for retirees

The provision of social security and retirement benefits is one of the most important parts of the government administration in every country as it affects a substantial chunk of the population. In different countries, it is known by different names and dealt with slightly different mechanisms, but the objective remains the same: to provide social security to citizens, especially after they retire from public work. For instance, in the US, it comes under the gambit of the Social Security Plan, in the UK or Canada it is known simply as Pension Plan, and in Australia it becomes Superannuation Schemes.

As such, a pension is a steady income given to a person (usually after retirement). Pensions are typically payments made in the form of a guaranteed annuity, to a retired or disabled employee. Some retirement plan (or superannuation) designs accumulate a cash balance through a variety of mechanisms that a retiree can draw upon at retirement.

There have been heated debates over the modalities of the pension that is best suited for any country. It is worth mentioning here that Chile in 1980 pioneered the first comprehensive change of a state-run, defined benefit scheme to a defined contribution pension system managed entirely by the private sector under supervision of a special government organisation. Argentina had also jumped on the same bandwagon in 1994, but partly reversed it in 2007.

Broadly speaking, the pension plans can be divided into two main categories: Defined Benefit and Defined Contribution plans. The Defined Benefit plan had been the most popular and common type of pension plan in the US through the 1980s and since that time, Defined Contribution plans have become the more common type of retirement plan in the United States and many other Western nations.

However, for most of the countries, a mixed approach or hybrid plan seems to be the most suitable, which combines the characteristics of Defined Benefit and Defined Contribution types. Such plan designs have also become increasingly popular in the US since the 1990s, with its Cash Balance and Pension Equity plans.

In Canada, the Canada Pension Plan (CPP) is a contributory, earnings-related social insurance programme. It forms one of the two major components of Canada's public retirement income system, the other component being Old Age Security (OAS). Other parts of Canada's retirement system are private pensions, either employer-sponsored or from tax-free individual savings (known in Canada as registered retirement savings plans).

It is also interesting to note that the market for pension fund investments is still centred around Anglo-Saxon economies with a conspicuous absence of Japan and the EU. As of 2005, the US was the largest market for pension fund investments followed by UK. Presently, the Pension reforms have gained momentum worldwide and funded arrangements are likely to play an increasingly important role in delivering retirement income security and also affect securities markets in future years;