PERSPECTIVE PLAN

The basic functions of the Employees' Provident Fund Organisation are the extension of Social Security cover to target population, management of the accounts of the subscribers and rendering service to the members of the Fund.

The Central Board of Trustees, Employees' Provident Fund on many occasions expressed their views for comprehensive restructuring of the Organisation to cope up with the challenges of the future.  In this context the Organisation has made a small beginning and a study is in progress covering system study and process re-engineering, design of a perspective plan and suitable Organisational structure which is the first such study undertaken by the Organisation in its forty years of existence.

The Executive Committee of the CBT, EPF in its 18th meeting held on 27.7.95 approved the proposal for designing of perspective and institutional strengthening study by M/s. Tata Consultancy Services, Hyderabad covering the following three areas:-  

• System study and process re-engineering.

• Preparation of perspective plan, and  

• Designing of suitable organisational structure.  

Consultants were required to establish a comprehensive pilot project in a Regional/ Sub-Regional Office having a representative character covering the core functions. The Consultants after completion of the system study and process re-engineering came up with a number of suggestions and recommendations requiring drastic changes in the work flow mechanism at the operational level.  Giving effect to the changes suggested by the Consultants at the operational level would call for:  

• Appropriate changes in terms of decentralised computerisation with computer terminals at every work station.  

• Integrated software environment.

• Simplification of remittance procedure by the employers, and

• Restructuring of statutory returns now being submitted by the employers.  

Notwithstanding the basic changes suggested by the Consultants, pilot project as envisaged in the terms of reference were attempted at the Regional Office, Faridabad and the Sub-Regional Office, Vishakhapatnam  respectively.

The Organisation has set up the Pension Scheme to address the long-term challenges to achieve the objectives behind the introduction of this new social protection scheme.  The Organisation had also taken up this issue with the International Labour Organisation [ILO] for their technical assistance covering :

• the need to determine a strategy for the future development of the EPFO with regard to the extension of coverage, the structure of the benefit programme and the relationship with other social security provisions.  

• the need to review the Organisation and procedures of the EPFO with a view to improving administrative efficiency.

Senior Social Security experts from International Labour Organisation who had undertaken a Technical Assistance Appraisal Mission of the Employees' Provident Fund Organisation noted that:  

The introduction of EPF has resulted in the EPFO becoming responsible for the administration of a pension scheme which is broadly based on social insurance principles.  The ESIC is responsible for the administration of a separate social insurance scheme, which provides both cash benefits and access to health care.  There is some overlap between these organisations.  To some extent, both  schemes pay benefits in respect of the same contingencies invalidity/permanent disablement and death.  Duplication of benefits from schemes dependent on public funding is undesirable and it is recommended that entitlement provisions should be reviewed both to achieve harmonisation of entitlement and to avoid duplicate entitlement.  In addition, both schemes carry out similar functions in respect of similar sectors of the population.   There is a need to study the scope for merging or at least partially integrating these schemes in order to increase overall efficiency and to reduce the administrative obligations on employers.   

One possible approach would be to provide all cash benefits through a restructured EPFO while allowing the ESIC to concentrate on health insurance.  Since the cash benefits provided are based on a medical assessment, there is some advantage, however, in the ESIC being able to use its own medical facilities for this purpose.  An alternative approach to rationalisation could focus on operational integration and on establishing a unified registration and collection system.

Technical Assistance Appraisal Mission of the ILO after their study of the Organisation have come up with the following findings: -

Introduction of the pension scheme has introduced a new dimension of responsibility to the EPFO.  This has administrative implications.  In particular, since entitlement will depend on length of service it will be essential to maintain lifetime records for members irrespective of how many times they change employment.  In general, this is not possible under present conditions where each member is generally allocated a separate number with each employer but this has not been of fundamental importance under the provident fund since each employment and period of membership can effectively stand alone.  It is recommended that the EPFO should establish a new system for registering its insured persons and for allocating and recording a unique number for each person.  

Within the operational structure, however, there is a complex web of systems and sub-systems which have been established to meet a wide range of eventualities but which have led in aggregate to time consuming movements of paper and inefficiencies, and thus to failings in the broad objectives of the organisation.  Although computerisation has been introduced in all offices, this has resulted in additional steps in work processes which in the  case of a claim involves 37 separate handling stages and takes a minimum of one month to finalise.  Computers are set up in an EDP section which serves other sections of the office on an individual basis and there are no work stations for access or data entry in accounts or enforcement or claims receipt.  Weaknesses are apparent both in the individual work processes and in the absence of an overall integrated information system which relates to the needs of each task holder.  Existing procedures place a burden on administrators, employers and members alike and this is reflected in the level of compliance of all.  

The ILO report has recommended that a comprehensive study should be carried out leading to a progressive restructuring of the systems which will start from its basic objectives and relate these back through the individual functions and work processes.  Such a study would include an examination of the role of each functionary in the process, his or her relationship with the line manager and an identification of the information requirements.  This would provide the basis for determining the role that computerisation should play and also for the development of a software.  

The International Labour Organisation has recommended for technical assistance projects covering:

• Work processes and line functions.  

• Software design and preparation.  

• Implementation of new systems in pilot project.

• Review of EPFO organisational structure and personnel policies.  

• Staff Training, and  

• Investment of social security funds etc.  

ILO has proposed for a number of technical co-operation projects on this account.  The Organisation has already taken up the matter with the Government who in turn has referred the issue to UNDP for funding assistance.