Many of you will be knowing Provident Fund from your father or from your schoolmates who are at 9 to 5 jobs. Seaman’s Provident Fund is no different when you look at the core concept of this scheme.
If we look at the EPF scheme, an employee has to pay a certain contribution towards the scheme, and an equal contribution is paid by his employer. At his retirement employee gets a lump sum amount which totals to self and his employer’s contribution with interest on both.
Table of Contents
Introduction
The Seamen’s Provident Fund Scheme framed under the Seamen’s Provident Fund Act, 1966 ( 4 of 1966 ) was introduced retrospectively w.e.f. Ist July 1964 to provide for the institution of a Provident Fund for all Seamen, in view of the apparent need to provide old age retirement benefits to the seamen members engaged in the Shipping industry ( Merchant Navy) and their family members in the event of death.
EPFO (Employees’ Provident Fund Organisation) overlooks the EPF scheme and here SPFO takes the charge. Seamen’s Provident Fund Organization is functioning under the Ministry of Shipping. The organization is responsible for collecting the provident funds of the seafarer from the respective shipping companies, managing the fund, and distributing them to the seafarer within the framework of Seamen’s Provident Fund Rules.
Let’s look at the key points of this scheme and how you and your family are benefited.
Who is eligible for Seaman’s Provident Fund?
Every seaman engaged on or after the 1st day of July 1964 on articles of agreement for employment on a ship is entitled and is required to become a member with effect from the date of such engagement.
Article of Agreement is simply the contract you sign with the ship owner or his representative before joining the ship i.e the manning company (RPSL).
Along with this, the seafarer shall mention in his declaration a nomination conferring the right to receive the amount that may stand to his credit in the Fund
in the event of his death before the amount standing to his credit has become payable,
or where the amount has become payable before payment has been made.
What is the contribution made toward the fund?
The rate of such contribution by the employer (the owner or the manning company) shall be 12% of the wages of a seaman with effect from 22nd September 1997 and, 10% of supplement payable to the seaman.
If the seaman so desires, they may contribute an additional amount exceeding the compulsory contribution of 10% of wages. This, however, shall not imply any corresponding obligation on the employer to increase this contribution, proportionately.
The employer shall, in the first instance pay both the contribution payable by himself (in this Scheme referred to as the employer’s contribution) and also on behalf of the member employed by him.
Also Read
Detailed benefits of Maritime Union of India (MUI) membership
What is the interest earned from the scheme?
There is no clear number mentioned anywhere, but if you consider its sister scheme, the EPF, it is performing at 8.1% per annum (2021-22) so, it will be around the same figure. All monies belonging to the Fund are invested in the Securities as per the pattern prescribed by the Ministry of Finance.
Interest for the period will be calculated on a monthly bearing balance basis at the credit of the member’s account and credited on the last day of the period.
What are the conditions for premature fund withdrawal?
One can link his life insurance policy from LIC(only) to the scheme, with the SPFO commissioner’s approval. No such payment shall be made unless the premium is payable half-yearly or yearly.
Unemployment is also a factor here, the Commissioner may, on an application from a member, who has completed five years of membership of the Fund, sanction a non-refundable withdrawal not exceeding 10% of his own total contributions with interest thereon it, if he remains unemployed for more than six months.
A non-refundable withdrawal can be sanctioned by the commissioner up to 25% of his own total contributions with interest thereon in the case of illness of himself or of a member of his family or both. (No second withdrawal under this paragraph shall be allowed within a period of two years from the date of payment of withdrawal).
Withdrawal from the fund for the purchase of a dwelling house or flat or for the construction of a dwelling house including the acquisition of a suitable site for the purpose. (withdrawal shall be admissible only after a period of five years from the date of completion of the dwelling house).
Non-refundable withdrawal for meeting the expenses in connection with the marriage of a member of the family of seamen, or higher education of children. (Not more than two withdrawals shall be admissible).
A member may withdraw the full amount standing to his credit in the Fund –
- on retirement from the seafaring profession on attaining the age of superannuation.
- on retirement on account of permanent and total incapacity for work due to bodily or mental infirmity duly certified by the medical authority or by such other medical officer as the Board may prescribe.
What if the contribution is not paid?
If any person fails to pay any contribution which he is liable to pay under this scheme he shall be punishable with imprisonment which may extend to one year or with a fine which extends to fifty thousand rupees, or with both.
What is the mode of payment?
Payment of withdrawals may be made by postal money order, demand draft, or by account payee cheque through the post or handed over to the concerned payee on office premises, except in the case of the deceased member, at the option of the member to whom payment is to be made.
As soon as possible after the close of each financial year, the Commissioner shall send to each member a statement of his account in the Fund showing the opening balance at the beginning of the year, the amount contributed during the year, the total amount of interest credited at the end of the year or debited in a year, and the closing balance at the end of the year.
Seafarers should satisfy themselves as to the correctness of the annual statement and any error should be brought to the notice of the Commissioner within six months of the receipt of the statement.
Click here for detailed terms and conditions.
Conlusion
- SPFO operates under the Ministry of Shipping
- SPFO collects provident funds from shipping companies for seafarers
- SPFO manages and distributes the funds according to Seamen’s Provident Fund Rules.
- All monies belonging to the Fund are invested in the Securities as per the pattern prescribed by the Ministry of Finance.
