ALL INDIA ASSOCIATION OF COAL EXECUTIVES

(AIACE)

(Reg no 546 dated 24/5/2016,Registered under The Trade Union Act, Govt of Chhatisgarh)

Registered office

302, Block no-4, Ramakrishna Enclave, Nutan Chouk, Sarkanda,Bilaspur

Distt- Bilaspur(CG) 495001

FIRST FOUNDATION DAY CELEBRATION

ALL INDIA ASSOCIATION OF COAL EXECUTIVES

(AIACE)

WORKSHOP ON

CMPF /EPF MERGER :

IMPACT ON WORKING/RETIRED/FUTURE COAL EMPLOYEES

TIME -- 7.00 PM

DATE -- 24/5/2017

KEY NOTE ADDRESS BY --- SRI P K SINGH RATHOR

VENUE-- SR RECREATION CLUB,

SECL KORBA AREA
EFFORTS FOR ENHANCEMENT OF PENSION TO COAL RETIREES

All India Association of Coal Executives(AIACE), since its inception has

been spearheading the movement for enhancement of pension to retired
coal employees. It conducted meetings, workshops, seminars at different
places to make the stake holders aware of the situation and impress upon
the govt to think over the issue of enhancement of pension. The constant
hammering at different levels caused awareness among employees and
also in trade union leaders. The CTU leaders/AIACE leaders took up the
issue with Coal India Mgt and Singreni Collieries mgt, CMPFO as well with
central govt. While interaction with CMPFO officials, it has been revealed
that the pension fund is depleting very fast and it is not possible to sustain
the fund at the present rate, leave the enhancement of pension. This has
caused worries and apprehension among the CMPF members.

On analysis of depleting fund , it has been understood that The CMPFO

failed to

---determine dues and exercise its powers to realise from the employers the
outstanding dues of its members.

---account for fund and pension contributions .

---Update member's passbooks.

---post individual ledger accounts of members.

---check diminishing return on investment .

---computerize system of accounting.

---redress grievances of members.

---properly use administrative charges collected from the employers.

--- ensure internal control .

---cover 100% of contractor's workers.

--to realize outstanding dues on account of PF and Pension arrears.

---recover arrears of damages recoverable amount.

----ensure sound financial management.

---- to take serious note of the depletion of the fund and suffering of the
pensioners retiring earlier than July 2006.
Coal Ministry's proposal to merge CMPF/FPF

Seeing the poor state of affairs and poor fund management, Coal ministry
is considering to shift the responsibility of fund management to EPFO in
place of CMPFO and accordingly constituted a committee in chairmanship
of Additional Secretary of Coal , Suresh Kumar and other members to look
into & explore the economic and legal aspects of the merger and submit
suggestions on proposed merger.

With a corpus of around Rs 80,000 crore, the CMPFO is the nodal retirement
body for the employees and pensioners of Coal India and SCCL It is
governed by the CMPF Act 1948.

The terms and conditions are as below :--

1.Whether CMPFO can be merged with EPFO ?

2.Terms and conditions of merger, if it is possible to merge CMPFO to

EPFO.

3. To examine the practical and legal aspect of merger.

4.Likelyhood of acceptance of merger by coal workers.

5. Change required to be made in the CMPF act due to merger.

6 Suggest road map of merger if at all it is feasible to merge CMPFO AND

EPFO.

7. Identify amendments in other laws that are needed before merger.

COAL MINISTER'S VIEW ON MERGER :

The proposed merger of Coal Mines Provident Fund with EPF will safeguard
workers' interests. For the future, employees' provident fund organisation,
which is the largest national body, should also look after the provident fund
of the coal mines workers.
Every workers existing right will be protected, safeguarded and there is no
question of any worker suffering any loss.
The only loss will be of the fiefdom of certain people who may be managing
the Coal Mines Provident Fund which will be taken away because national
employees' provident fund is a better managed organisation.
It gives better returns than the Coal Mines Provident Fund investments and
therefore, it is in the national interest, public interest and workers' interest.
PROVIDENT FUNDS IN INDIA :

Provident Fund Acts in India :

Coal Mines Provident Fund Scheme (1948),

Employees Provident Fund Act,1952,

Assam Tea Plantation Provident Fund Scheme (1955),

Jammu & Kashmir State Provident Fund Scheme (1961) and

Seamen Provident Fund Scheme (1966).

Coal Mines Provident Fund & Miscelleneous Provision Act,1948 .

Coal Mines Provident Fund (CMPF) is a retirement benefit scheme and is

available to all salaried employees working in Coal India and Singreni
Collieries, Telangana . This fund is maintained and overseen by the Coal
Mines Provident Fund Organisation of India (CMPFO).
CONTRIBUTION -- No ceiling on Pay for contribution to the Fund.

MINIMUM WAGE FOR COAL-WORKERS

NCWA IX(1/7/2011 TO 30/6/2016) --Rs 17565/ month excluding Underground

Allowance and at NIL Variable D.A.

NCWA X(1/7/2016 to 30/6/2021) --- Rs 24449 /month( Expected)

MINIMUM SALARY FOR COAL EXECUTIVES (wef 1/1/2007)

E1 grade -- Rs 16400-40500 + other allowances.

EMPLOYEE EMPLOYER GOVT

SN SUBSIDY
(% of wage) (% of wage)
(% of wage)

CMPF 10.84 10.84

EPS 1.1 6 %+2.00% 1.1 6%+ 1.66 % /on

=3.16 % of one maxm Rs
salary+ one increment 1600=Rs
increment of 3% of 25.56
of 3% of basic
basic salary as
salary on 1/7/1995
joining for the
after then
1/7/1995. existing
employees.

EDLI 0 0
Employees Provident Fund & Miscellaneous Provision Act,1952

Employees Provident Fund (EPF) is a retirement benefit scheme thats

available to all salaried employees. This fund is maintained and overseen by
the Employees Provident Fund Organisation of India (EPFO) and any
company with over 20 employees is required by law to register with the
EPFO.
Its a savings platform that helps employees save a fraction of their salary
every month that can be used in the event that you are rendered unable to
work, or upon retirement.
A provident fund is created with a purpose of providing financial security
and stability to employees. A person starts his contribution in the PF fund
once he joins a company as an employee. The contributions are made on a
regular basis. The primary purpose of PF fund is to help employees save a
fraction of their salary every month so that he can use the same in an event
that the employee is temporarily or no longer fit to work or at retirement.
It is mandatory to contribute to EPF by employees . However, employees
drawing a basic pay of more than Rs. 15000 have option to opt out of the
scheme.

CONTRIBUTION --

EPF --- Wage limit per month

1/11/1952 to 31/5/1957 --- Rs 300/month

June 2001 --- Rs 6500/month

1/9/2014 ---- Rs 15000/month

SN EMPLOYEE EMPLOYER GOVT

SUBSIDY

(% of wage)
(% of wage) (% of wage)

CONTRIBUTION
ACCOUNT

EPF 12 3.67

EPS 0 8.33 1.16

EDLI 0 0.5
Additional amount (over and above 12%) to Provident Fund by depositing
VPF (Voluntary Provident Fund may be made. However, employer is not
bound to do a matching contribution.

Pension Benefits:

The employee can start receiving the pension under EPS only after
rendering a minimum service of 10 years and attaining the age of 58/50
years.

No pension is payable before the age of 50 years and early pension after 50
years but before the age of 58 years is subject to discounting factor @ 4%
(w.e.f. 26.09.2008) for every year falling short of 58 years.

In case of death / disablement, the above restrictions doesnt apply.

Lifelong pension is available to the member and upon his death members of
the family are entitled for the pension.

Under Employees Pension Scheme, the monthly retiring pension is decided

on the basis of Pensionable Service and Pensionable Salary and is
worked out as follows

Monthly pension=( Pensionable salary*Pensionable service)/70

Pensionable Salary is arrived at by considering the average contributing

salary immediately preceding 12 months from the date of exit from the
scheme limited to Rs 15000 p.m. unless certain enhanced contributions are
made by the employer with permission.

Pensionable Service is the service in years rendered by the member for

which contributions have been received, maximum exceed 35 years.

Based on a maximum employment period of 35 years, the maximum

amount of pension as per the Pension formula would be Rs 7500 per month.
Employees Deposit Linked Insurance Scheme (EDLI)

EPF Act also includes EDLI scheme under which life insurance cover is
provided to the PF members. The cost of the scheme is borne by the
employer.

The Scheme was introduced simultaneously in 1976 under both the Act. The
employees were not required to contribute any amount under this Scheme.
However, the ceiling for this benefit remained at Rs One (1) lakh through out
under CMPF where as it was revised under EPF to Rs 3.6 Lakhs w.e.f
1.9.2014 and RS 6 Lakhs since 24.5.2016.

Withdrawal of PF & Pension

Legally it is mandatory to transfer EPF Account at the time of job change.

But, people generally dont do it; instead of transferring, they withdraw the
amount.
In case of EPS, if the service period is less than 10 years, there is option to
either withdraw corpus or get it transferred by obtaining a Scheme
Certificate. Once, the service period crosses 10 years, the withdrawal
option ceases.

BENEFITS TO MEMBERS UNDER EPF SCHEMES

Provident Fund benefits

1. Employer also contributes to Members PF @ 12% ( 10% in case of sick

industrial co., any establishment having accumulated loss equal to its entire
paid up capital and any establishment in Jute Industry, Beedi Industry,
Brick Industry, Coir Industry and Gaur Gum Factories).
2. EPFO guarantees the Employer contribution and credits interest at such
rates as determined by the Central Government.
3. Member can withdraw from this accumulations to cater to financial
exigencies in life - No need to refund unless misused
4. On resignation, the member can settle the account. i.e., the member gets
his PF contribution, Employer Contribution and Interest.

Pension Benefits

1. Pension to Member
2. Pension to Family (on death of member)
3. Scheme Certificate
Withdrawal Benefit

If not eligible for pension, member may withdraw the amount

accumulated in his pension account

The calculation of this amount is based only on (i) Last average

salary and (ii) Service.

Death Benefits

1. Provident Fund Amount to Family (or to Nominee)

2. Pension to Family (or to Parent / Nominee)
3. Capital Return of Pension
4. Insurance (EDLI) amount to Family (or to Nominee)

WITHDRAWAL FROM EPF

Marriage or education of yourself, your siblings, or children.

Addressing emergency medical expenses for yourself, spouse, children, or
dependant parents.
Repaying housing loans for a house owned by you, a spouse, or jointly by
both of you. You can do this only after 10 years of service and contribution to
EPF.
Paying the costs of alterations/repairs to your existing home. Youll need to
have been in service and contributing for 5 years for alterations and 10 for
repairs.

RECOVERY OF DAMAGES FOR DEFAULT IN PAYMENT

If an employer makes default in the payment of any contribution to the Employees'

Pension Fund, or in the payment of any charges payable under any other provisions of
the Act or the Scheme, the Central Provident Fund Commissioner or such officer as
may be authorised by the Central Government, by notification in the Official Gazette,
in this behalf, may recover from the employer by way of penalty, damages at the rates
given below:

Period of default Rate of damages(% of arrears per annum)

Less than 2 months 5%

Two months and above 10%
but less than four months
Four months and above but 15%
less than six months
Six months and above 25%
CLASSES OF INDUSTRIES UNDER EPF SCHEME

As on date, the EPF & MP Act extends to organisations engaged in 187 areas of
activities . Any establishment falling in any of the 187 categories and employing more
than 19 persons automatically comes under the purview of the EPF & MP Act 1952.

The employees of following industries/establishments are covered under EPF.

Cement ,Cigarette, Engineering Goods, Iron and steel, Paper, Textiles,

JuteEdible oil and fats, Sugar, Rubber and products, Electricity
(generation, transmission and distribution),Tea, Printing, Stoneware &
sanitaryware, Refractories, tiles, Glass and products, Fertilizers, Medicinal
and pharmaceutical preparations, Toilet preparations, soaps, inks,Dyes,
fatty acids, Oxy acetelene and carbon-di-oxide gas, Indigo, lac and
shellac, news paper, Mineral oil refining, Plantation(coffee, rubber,
cardamom,pepper, mixed), Mines(Iron,Manganese, limestone,gold,
bauxite,asbestos,steatite,ochre,quartz,silica,feldspar,emerald,corrundum,
soap,stone,appatite,calcite,marble,chromite,graphite,flourite,lignite,ferroc
hrome,quarsite,kyanite,fireclay,gysum,siliminite,dolomitew,barite,mica,Al
cohol,Biscuit making, plywood, automobile repair,sugar factory,
milling(rice, flour,dal),Hotel and restaurants, Petroleum and natural gas
,Film and cinema production and processing, leathers and leather
product, Trading and commercial organisations, Fruit and vegetable
preservation, saw mills, wood seasoning, wood workshop, Confectionery,
laundry, Plastic and products ,stationery products, societies, clubs,
association, canteens, soft drink and aerated water, distillery, paint and
varnish, CA/ICWA firms, Medical practiceners , Milk and products, Travel
agency, Forwarding and clearing houses ,Coir ,agarbatti, Bricks,
explosives, fire works, tent making ,ice cream, diamond cutting, general
insurance ,railway booking, beer manufacturing, garments making, fruit
orchard, botanical and geological gardens, fish processing, beedi making,
building and construction, poultry, university/college, scientific
institutions
COMPARISION OF THE TWO PROVIDENT FUNDS

EPF -- The modalities for computation of Pension, Employees Deposit-

Linked Insurance, Governments contribution towards Pension Fund is
much better under EPF than that of CMPF. These are briefly described
below:

(A) Formula for Computation of monthly Pension:

(i) CMPF Pension.

Pensionable salary Pensionable

(Unlimited) X Service
(Basic pay + V.D.A) Limited to to 30 years
120

(ii) EPF Pension.

Pensionable Salary X Pensionable

Limited to Rs 15,000 Service without

(Basic pay + V.D.A) limit

70

(i) In spite that the Formula for Pension under EPF is better in the ratio of
120:70 but the limit of Pensionable Salary to Rs 15,000 is too little
compared to that of unlimited Pensionable Salary under CMPF

(ii) EPF Pension Scheme has as advantage of addition of 2 years of service if

the service rendered is 20 years or more.

(iii) If any employee contributes to the Provident Fund beyond 58 years under
EPF, the Pension is raised by at the rate of 4% per year subject to the
ceiling of 8%
 (iv) If a computation is made in respect of an employee under EPF
having served for 30 years and contributed to the Pension fund
upto 60 years of age, his monthly Pension would be computed on
the following lines:

Rs 15000X(30+2)

+8%

70

(v) Against a limit on pension under EPF of Rs 7403 (or few Rupees
more if Pensionable Service is more than 30 years) the limit under
the CMPF Pension Scheme may work out to more than 70-80
thousand of Rupees. The senior non-executive after
implementation of the MCWA X may get monthly Pension upto
30-35 thousand Rupees.

Governments Contribution to the Pension Fund:

CMPF--

The Governments contribution-- 1.66% of Rs 1600 = Rs 26.56 per month per

employee member since 1971 i.e. for the last 46 years.

EPF --

Govts contribution --- 1.16% of Rs 1000= Rs 11.60 per month/employee(1971)

= Rs 75.00 since 1-6-2001

= Rs 174 w.e.f 1.9.2014.

DEPLETING CMPF AND AUGMENTING EPF

CMPF

Membership --- 7,93, 936 (31/3/1998)

---- 4,68,703 ( 31/3/2016)

This works out to average annual reduction of membership by

about 18000.

The membership of EPF is rising by several lakhs every year and the
membership might be touching a figure of about 5 crores by now. The
number of Pensioner under the CMPF Pension Scheme is more than the
live members where as the Pensioners under EPF is less than 15% of
the live membership. EPF stands on very strong footing where as the
CMPF will collapse within few years if remedial measures are not taken
immediately.

INFLOW AND OUT FLOW TO CMPF AND PENSION FUND OF CMPF

Year CMPF(In CMPF (out Pension Fund (In Pension Fund

flow) Rs flow) Rs flow) Rs Crores (Out flow) Rs
Crores Crores Crores

2013-14 4103.7 4650.8 833.0 1353.9

2014-15 4286.1 5176.8 800.5 1601.6

2015-16 4947.9 5593.9 966.9 1895.8

ADMINISTRATIVE MINISTRY for administration of acts

LABOUR MINISTRY -- CMPF & MP Act, 1948 &EPF & MP Act, 1952

COAL MINISTRY -- CMPF & MP Act, 1948 -- After nationalisation of

coal mines to look after the CMPF better than the Ministry of Labour
having burdened with many activities related to welfare and social
security of the workers at large.

However, the reverse happened as the ministry of Coal Concentrated on

production and profit making by the Coal companies coupled with
allotment of Coal Blocks to private companies. The Ministry of Coal
Could not get the Govts contribution raised even at par with that of the
Pension Fund under the EPF. The B.O.T did not impose any contribution
to be made to the Pension Fund by employer. Their contribution is NIL.
The employers claim for contribution of 1.16% of pay is absolutely
wrong. This 1.16% is paid out of 24% of pay as Provident Fund of the
employee-member. The employer was paying an amount equal to one
increment only in respect of such employees who were on roll as on
30.6.1995.

It is understood now that the Management and Unions have

agreed to enhance the total contribution of 14% of Pay to the Pension
Fund. The Pension Fund would be viable only on linking the employers
contribution to production of both Coal and Overburden.
CONCLUSION

(1) The Ministry of Coal should undertake any step to increase pension of
retirees who retired before 2007 and 1997 ie before implementation of
2nd and first pay revision for executives and bring it at par with pension
payable to today's retirees. It should also think for including a limited
number of surviving executives/employees who retired before
implementation of CMPS1998 wef 1/4/1994. Even if, the pension is
increased by merging CMPF with EPF, it is acceptable. But govt should
not take such steps which will result in reduction of pension to retired
executives, employees and workers.

(2) The implementation of CMPF & MP Act, 1948 may be handed over to
EPFO for its administration only. The benefit provisions should be same
or increased but not decreased.

(3) In the mean while ,step should be taken to augment the Coal Mines
Pension Fund enabling its sustenance and revision of Pension.

This can be done by

(a) realising from the employers the outstanding dues of its members
particularly contractors workers.

(b) checking diminishing return on investment by adopting dynamic

investment planning..

(c) redressing grievances of members.

(d) covering 100% of contractor's workers.

(e) recovering arrears of damages recoverable amount.

(f) ensuring sound financial management.

(g) increasing govts subsidy of 1.66% of at present salary of employees.

(h) Increasing employee/employer contribution towards pension fund at the

rate of 7% of salary.