Government Makes Aadhaar Mandatory for EPS


Government Makes Aadhaar Mandatory for EPS

After the Union Government’s sudden crackdown on black money through demonetization and Income Tax raids, a number of unexpected things happened. One such unexpected move was an announcement from Ministry of Labor, which came on January 4, 2017. What was that announcement? In a notice issued byLabor Ministry of Union Government, it was made clear that Employees Provident Fund Organization or EPFO has now decided to stop all benefits of EPS or Employee Pension Scheme for those pension holders who will not provide a proof of possession of Aadhaar number. Aadhaar submission or at least proof of application for Aadhaar needs to be provided in order for EPF members to enjoy EPS benefits. Every employee covered under EPS needs to complete Aadhaar authentication and that, failure to do so will mean that EPS pension will be stopped for those who fail to complete Aadhaar authentication.

Government Makes Aadhaar Mandatory for EPS

A few questions that follow naturally after this announcement are:

  • Why did the government suddenly decide to make Aadhaar authentication compulsory?
  • What are the things where Aadhaar has been made mandatory?
  • What order has been issued by Supreme Court of India with regards to Aadhaar?

Aadhaar Made Mandatory for EPS

Employees’ Provident Fund Organization or EPFO – the body which runs the popular retirement fund for Indian citizens has now made it mandatory to furnish Aadhaar number. In case those who do not have Aadhaar number need to provide the necessary proof of Aadhaar application by end of January, 2017. This requirement has been levied on:

  • 50 lakh people who earn pensions under the EPS or Employee Pension Scheme.
  • 4 crore EPFO subscribers across India.

EPFO, has clarified that those who fail to provide the necessary document will be excluded from all social security schemes which are run by the organization.

EPFO’s decision was made public by issuance of a notice from Labor Ministry. The ministry clarified that:

  • Central Government runs various schemes and benefits for citizens of India. Sometimes, corruption leads to leakage of those benefits (funds) and the actual beneficiaries fail to receive the intended benefits. Aadhaar with help government to bring transparency and increase the efficiency of such schemes.
  • Aadhaar discards the need for providing multiple documents when it comes to identity verification. Aadhaar alone is sufficient enough to prove one’s identity.

Where to enroll?

People who do not have an Aadhaar number allotted so far are required to apply for the same. The application is to be made through centers for Aadhaar enrolment. People need to physically visit those centers and complete the enrolment process by end of January. The last date for that has been fixed at January 31, 2017. EPFO has received instructions from Union Government to set enrolment centers at convenient locations in case there are no enrolment centers are nearby.

What if Aadhaar is not available?

It is possible than an EPFO member does not have an Aadhaar number because:

  • He or she has already enrolled but is yet to receive the Aadhaar number.
  • He or she has not enrolled for Aadhaar number yet.

In either of the above situation, they need to provide necessary documents so as to continue enjoying the benefits of the social security schemes run by EPFO, especially, EPS. The documents that they need to provide are:

  • A certificate of identity that has been issued by EPFO or Employees’ Provident Fund Organization along with UAN or Universal Account Number. The certificate may also be issued by the employer with whom the person or member of EPFO is employed.
  • The ID provided for Aadhaar enrolment to the pensioner or member. Alternately, the member can also provide one copy of the Aadhaar enrolment request.
  • A copy of any of the below mentioned documents
    • PAN Card
    • Voter ID Card
    • Driving License
    • Passport
    • Identity proof certificate issued on official letterhead by tehsildar or gazetted officer. Such certificate must mandatorily have the photo of the person to whom the certificate belongs.
    • EPFO specified any other document which proves the identity of the person.

EPFO or Employee’s Provident Fund Organization has appointed special officers who have been given the task of checking the aforementioned documents. Such verifications will take place via EPFO networks and field offices.

In case you didn’t know…

Any employed person, who is a member of EPF or Employees’ Provident Fund, gets enrolled for EPS automatically. The person however is not required to pay or contribute towards EPS or Employee Pension Scheme. EPS contribution actually comes from the contribution made by the employer towards EPF. However, not the entire portion is not moved into EPS. Only 8.33% of the what the employer contributes towards EPF is moved into EPS. Depending on the basic salary of the employees, the government can contribute 1.16% of the basic salary as EPS contribution. These contributions are pitched in on a monthly basis. INR 1,000 is the minimum pension that one can earn under EPS.

Is Aadhaar necessary for EPF transactions?

We already know that EPF subscribers automatically become EPS subscribers. Thus, this brings up one question – is Aadhaar necessary even for EPF transactions. Rumors have been floating around that Aadhaar has been made mandatory even for EPF transactions. This is absolutely wrong. However, BandaruDattatreya – Labor Minister, has made it clear that no such mandate has been issued and people can continue to carry out EPF transactions even though they do not have Aadhaar number.

Government Subsidy and Aadhaar Act, 2016

In case you are not aware of the fact, each year, a sum of 850 crore rupees is pushed by Government of India as budgetary support towards EPS. The sum is provided on tapering basis. Now, that’s a subsidy, right? This means that EPFO members who earn pension under EPS actually get subsidy from Central Government.

Now, there is something called Aadhaar (Targeted Delivery of Financial and other Subsidies, Benefits and Services) Act, 2016. This act has something called Section 7, which clearly states that the government has every right to ask a person to provide Aadhaar number possession proof or ask a person to undergo substantiation or authentication if, the said person services, benefits or subsidy from Government (or India’s Consolidated Fund). According to Section 7 of Aadhaar Act, a person can enroll in government operated scheme offering benefits, subsidy as well as services from National Consolidated Fund if, an Aadhaar number has been assigned to that person.

Thus, EPFO and government actually invoked that rule and made it mandatory to have Aadhaar number seeded with UAN or Universal Account Number provided by EPFO to the PF holders. EPFO cites a number of benefits of such seeding. One such benefit is that when a person claims PF settlement online, the Aadhaar number can be used for verification and quick settlement, thereby preventing fraud. Aadhaar has biometric authentication and hence, once tedious financial transactions can now be accomplished with ease and that too without the scope of any fraud.

Another benefit is that since Aadhaar will be seeded with UAN, pension holders will no longer have to be present physically at the agencies responsible for disbursing pension. To simplify things further, the government came up with the scheme of Digital Life Certificate and scheme for fund portability. Because of these scheme, the pension holders can now use Jeevan Praman Portal for remotely producing their life certificate.

With Aadhaar Card, people can now participate in NPS and open pension accounts. NPS stands for New Pension Scheme. NPS will allow opening online account in just under 30 minutes provided a person holds a bank account. Also, the bank account should be in any one of 22 banks that National Securities Depository Ltd. or NSDL has empaneled.

Aadhaar in News:

  • In 2017, the main exams of Joint Entrance Examination will be held. The candidates who have qualified for the mains will have to provide their Aadhaar number. Failure to do so will mean that they will be barred from writing the exams.
  • Starting January 3, 2017, Mahatma Gandhi NREGA registered individuals need to apply for Aadhaar enrollment in case they do not have Aadhaar card yet. This enrollment has to be completed by January 31, 2017.
  • AIIMS or All India Institute of Medical Sciences is one of most reputed medical organizations in India. This organization has issued a mandate that registration fees will be waived off if Aadhaar number is shown by patients. However, if patients fail to show Aadhaar number, they will have to pay a registration fee of INR 100. Currently, the registration fee is INR 10. Failure to show Aadhaar will mean that they have to pay 10 times the current fee.
  • External Affairs Ministry, on 23 December, 2016, announced that Indian citizens applying for Passport can now furnish Aadhaar as a total valid proof of Birth Date. Even for online passport application, eAadhaar will also become a valid Birth Date proof.

With reference to MNREGA, Aadhaar Act says that if an individual is entitled for obtaining an Aadhaar Card under the Act’s Section 3, he or she should visit a center for enrolling into Aadhaar system.

Speaking or commenting on Aadhaar mandate by EPFO, D.L. Sachdev, who is the secretary of AITUC stated that, government has given a very short notice. Sachdev stated that AITUC or All India Trade Union Congress praises this move of government and has no objection against the whole idea but the only objection is with the allotted time frame. The only problem is that the government has provided a very short time frame for Aadhaar enrolment.

Aadhaar and Supreme Court

On 11th August, 2015 and on 10th October, 2015, India’s Supreme Court passed two interim orders about Aadhaar. These two orders are quite surprising.

Supreme Court clearly stated that obtaining Aadhaar is voluntary and is not mandatory. The Government of India should indulge is widespread publicity through print and electronic media and convey this message that Aadhaar participation is totally voluntary and the citizens may actually opt not to enroll in Aadhaar.

The order also states that in order to obtain benefits Aadhaar card production cannot be a condition but the Union Government can always use Aadhaar for LPG Distribution and Public Distribution Schemes.

The court has however accepted the plea of the Union Government to allow it to use Aadhaar for:

  • National Social Assistance Programme.
  • Employees Provident Fund of which EPS is a subset.
  • Pradhan Mantri Jan Dhan Yojana.

The orders allow the Union Government to use Aadhaar but explicitly states that making Aadhaar mandatory is not allowed for now unless and until the Supreme Court finalizes the same.

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