Among the safest, long-term retirement savings plans for salaried individuals in the country, the employees provident fund (EPF) is offering 8.25% interest this quarter on joint monthly contributions made by employers and employees.
Members are eligible to open an account if their basic salary and dearness allowance is up to ₹15,000 per month, with provision for voluntary provident fund () option if the components exceed ₹15,000/month.
Subscribers receive the lump sum corpus at , with accumulated employee contribution of up to ₹2.5 lakh being tax-free, and the full employer contribution being tax-free. Further, during the tenure of the scheme, annual contributions of up to ₹1.5 lakh by the employee are exempt under Section 80C of the old tax regime; while employers’ contribution below ₹7.5 lakh is exempt under the old and new tax regimes.
Today, we explain what a social security agreement (SSA) is, where and for whom it applies, and the related terms and conditions for the coverage.
How SSA works: Top FAQs answered
What is a Social Security Agreement (SSA)? A Social Security Agreement is bilateral agreement between India and another country to ensure continued social security coverage of posted in another country. Being a reciprocal arrangement, it generally provides for avoidance of double coverage.
What provisions are covered in an SSA? This generally covers three provisions. They are:
- Detachment: International workers deputed to work in a country having an agreement on with their home country are not required to contribute to the social security system in the host country, provided they are contributing to the social security system of the home country.
- Exportability of Pension: Provision for payment of benefits directly without any reduction to the beneficiary choosing to reside in the territory of the home country as also to the beneficiary choosing to reside in the territory of a third country as outlined in the respective SSA.
- Totalisation of Benefits: Service rendered in the SSA country is added to the service rendered in India to determine the eligibility for pension.
- Equality of treatment: Equality of treatment to the international workers (IWs) from an SSA country with the host country workers.
How many SSAs are signed by India? As on date, has signed 20 SSAs out of which 19 have been made effective as follows:
| Country | Date of coming into Effect | Period of Detachment allowed |
|---|---|---|
| Belgium | 01-09-2009 | 5 years |
| Germany | 01.10.2009 | 4 years |
| Switzerland | 29-01-2011 | 6 years |
| Denmark | 01-05-2011 | 5 years (for Indians); 3 years (for Danish) |
| Luxembourg | 01-06-2011 | 5 years |
| France | 01-07-2011 | 5 years |
| South Korea | 01-11-2011 | 5 years |
| Netherlands | 01-12-2011 | 5 years |
| Hungary | 01-04-2013 | 5 years |
| Finland | 01-08-2014 | 5 years |
| Sweden | 01-08-2014 | 2 years |
| Czech Republic | 01-09-2014 | 5 years |
| Norway | 01-01-2015 | 5 years |
| Austria | 01-07-2015 | 5 years |
| Canada | 01-08-2015 | 5 years |
| Australia | 01-01-2016 | 5 years |
| Japan | 01.10.2016 | 5 years |
| Quebec | 01.04.2017 | 5 years |
| Portugal | 08.05.2017 | 5 Years |
| Brazil | Yet to enter into force | 5 Years |
Should employees from countries other than those with SSAs contribute as International Workers? Each and every worker from a country not having either SSA or bilateral comprehensive economic agreement with India has to contribute mandatorily.
Are IWs employed in India and being paid in foreign currency coverable? Yes, IWs drawing salary in any currency and in any manner are to be covered as IWs. The contribution in respect of such IWs will be computed in Rupees. The rate of conversion of that currency shall be the telegraphic transfer buying rate offered by the State Bank of India () for buying such currency on the last working day of the month for which wages is due.
Is a foreigner employed directly by an Indian establishment coverable? A foreigner employed directly by an Indian establishment would be coverable, if the establishment is covered/coverable under the and MP Act, 1952.
What is condition for IWs to receive withdrawal benefit from SSA countries, under EPS, 1995? Only, those IWs who are covered by an SSA will be eligible for withdrawal benefit under the EPS, 1995 provided they have not rendered the eligible service (i.e.10 years) even after including the totalisation benefit, if any, as may be provided in the said agreement. In case of IWs from non SSA countries, benefit under the EPS, 1995 will not be available.
Under what circumstances accumulations in the PF account are payable to IWs? The full amount standing to the credit of a member’s account is payable in the following circumstances:
Persons covered SSA: On ceasing to be an in an establishment covered under the Act.
Persons NOT covered SSA:
(i) On retirement from service in the establishment at any time after 58 years of age;
(ii) On retirement on account of permanent and total incapacity for work due to bodily or mental infirmity, duly certified by the authorized medical officer.
What is certificate of coverage? COC is a certificate issued by the liaison agencies of the respective SSA country, certifying that the person who is being deputed India, is covered under the SSA of their home country. issues COC in respect of Indian workers being deputed to SSA countries and based on this certificate Indian workers are entitled to exemption from contributing under social security system of host country.
Who is the Competent Authority to issue the certificate of coverage? The office of the regional PF Commissioners are the competent authorities to issue the COC in respect in respect of Indian workers being deputed to SSA countries.
Are Overseas Citizen of India (OCI/Person of Indian Origin (PIO) card holder) treated as IWs? All foreign nationals, including /PIO card holders are required to be enrolled and comply with EPFO, as IWs.
Can pension benefits be availed by the claimant belonging to SSA country in their home country? Yes, as portability has been provided in the SSAs, the persons covered under such SSA can opt for payment of benefits in their home country.
What is the procedure for getting CoC for a person posted to a country having SSA with India? To avail COC, the prescribed online application forms, available on International Workers Portal on the official website of EPFO, needs to be filled up by the employee, approved by the employer using e-sign and submitted online to the office of EPFO, under whose jurisdiction the establishment is registered.
Are Nepalese and Bhutanese nationals considered IWs? As per the proviso to Substituted Para 2(ja) under Para 83 of the , Nepalese and Bhutanese nationals shall be deemed to be Indian workers.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.