Centre to pay for entire 12 per cent contribution for Pension for the first 3 years for new employees

In a major move that may help in giving a push to job creation in the country, the government has decided to pay for the entire 12 per cent contribution for pension for the first three years for new employees. The Centre is hoping that the decision would help in creating one crore new jobs as the Union Cabinet has cleared a proposal to bear the entire 12 per cent of the basic salary that employers are mandated to make towards the pension for the first three years for new staff.

“Our government is committed to creating jobs. The scheme which was implemented in 2016 had a provision for the government to pay for 8.33 per cent of the pension contribution by employers,” said Labour Minister Santosh Kumar Gangwar on Thursday. “We have further expanded the scope of the scheme. It has been decided that for apparel, garment and textile segments, the full 12 per cent of the employers’ pension contribution will also be borne by the government,” Gangwar added.

As many as 30 lakh workers have already been benefited from the Pradhan Mantri Rojgar Protsahan Yojana (PMRPY), which was launched in August 2016, he said. “We feel that the government’s decision will help create one crore new jobs, and we will increase budget provisioning by about Rs 6,500-Rs 10,000 crore under this scheme,” the minister said.

Employees, who are already reaping the benefit of the 8.33 per cent pension contribution, will be updated to the 12 per cent bracket for the remaining period of their first three years, Gangwar said. According to the latest report by TeamLease, it has been estimated that rolling out of 10 regulatory reforms, including demonetisation, GST, FDI, digitization and artificial intelligence, etc, have the potential to create around 10 million jobs across the country and 7 lakh jobs in Delhi/NCR.

“The country is going through an exciting phase with most of the sectors experiencing growth prospectus. In the coming three years, the country would have 10 million jobs in different sectors,” said Mayur Saraswat. Notably, Indian Railways has also started recruitment process to fill over one lakh vacancies of different levels.

The government bears 8.33 per cent employers’ contribution to the Employees’ Pension Scheme (EPS) for new workers under PMRPY. Employees who have joined on or after April 1, 2016, having a new Universal Account Number (UAN) with salary up to Rs 15,000 per month, are covered under this scheme.