NEW DELHI: Nearly 7,000 expatriates are caught in a battle between India and the United States over contributions made by their citizens towards provident and pension funds and social security.
The Employees Provident Fund Organization, which handles provident and pension funds for the organized sector employees in India, recently tightened the norms which has resulted in protests from expats, and their employers. Following the amendments, international workers would be permitted to withdraw their accumulated balance only after they turn 58. Though contribution to PF and Employees Pension Scheme (EPS), which amounts to 12% of the monthly pay, was mandated in 2008, withdrawals were permitted at the end of an expat’s employment in India. Now, withdrawals are only permitted in case of permanent and total incapacity to work or in case of those suffering from cancer, leprosy or tuberculosis.
An exemption towards EPFO contribution has only been made in case of employees from countries with which India has signed Social Security Agreements and the list includes three nations-Belgium, France and Germany. For India, this is retaliatory action prompted by the refusal of the US to sign a Totalization Agreement that would make it possible for Indian professionals, several of whom are IT company employees on onsite visits, to get their dues when they finish their employment. In the absence of a Totalization Agreement, the US refused to refund the money deducted from the salaries of Indian professionals towards social security contribution.
Despite the Indian government making a case for a pact for over a decade, the US has refused to sign one saying India does not have a social security system. It has refused to accept the EPF or even the New Pension Scheme as one. In the absence of an agreement, Indians working in the US have complained for years that they are losing significant amounts.