EPS Pensions Alert: Good news is likely to knock on the doors of pensioners in India, as reports state that the government is likely looking to revise the minimum guaranteed pension in EPS. The EPS pensions could rise by a whopping 650% to Rs 7,000 from the current Rs 1,000 per month. According to reports, a parliamentary committee is going to evaluate the revision in EPS.
What Is the Employees' Pension Scheme (EPS)?
It's been nearly 3 decades since EPS scheme was put in place by EPFO. Launched on November 16, 1995, the EPS scheme is a social security option, developed by EPFO for employees in all organised sectors.
Under the Employees Pension Fund, the employer should contribute 8.33% of the employee's salary to the EPS account within 15 days of the closing of every month. Further, the central government is also liable to contribute a 1.16% rate to the funds.
Under this scheme, the government offers a fixed minimum pension ranging from Rs.1,000 to Rs.2,000 monthly to pensioners. This was started by the government on September 1st, 2014, along with providing additional budgetary support to the EPF scheme, as per ClearTax.
What Is Expected in EPS pensions?
As per reports, trade unions and other associations have been demanding a hike in EPS, since it has been nearly a decade since the minimum pension underwent revisions.
Good News is expected ahead!
As per Finance Express, a parliamentary standing committee has asked the labour ministry to complete a third-party evaluation of the EPS within a definite timeframe. The panel, headed by Bharatiya Janata Party Member of Parliament Basavaraj Bommai, preferably wants the evaluation process to be done by the end of 2025.
According to the reports, the panel may enhance the minimum EPS pension of Rs 1,000. FE cited the panel's report that revealed that considering the manifold increase in the cost of living in 2024 vis-à-vis 2014 and other relevant factors, there is a need to seriously consider an upward revision of this amount. The report stated that the panel may hike the pension to Rs 7,500 from Rs 1,000.
Who Are Eligible To Receive Monthly Pension?
An employee is entitled to a superannuation pension if he or she has rendered eligible service of 10 years or more and retires on attaining the age of 58 years.
Further, early pension is granted if he or she has rendered eligible service of 10 years or more and retires or otherwise ceases to be in employment before attaining the age of 58 years.
How To EPS Pensions Are Calculated
The formula for calculating EPS is:
Monthly member's pension = Pensionable salary X Pensionable service/70
Here are the details of the calculation, as per ClearTax:
1. Pensionable Salary: It is the average monthly salary that an employee receives in the last 60 months before they decide to exit the Employees' Pension Scheme. This is as per the judgement of the Supreme Court on November 4th 2022. Earlier, it was the average monthly salary of the last 12 months of the employee's participation in the scheme.
2. Pensionable Service: This refers to the total number of years for which contributions were made to the EPS account. According to the law, pensionable service must be rounded off to the nearest year. This means that in case you serve for 6 months or more, then it will be treated as a year. If it is less than 6 months, the year will not be counted. If you superannuate at the age of 58 years and have served for more than 20 years, then your service tenure will be increased by 2 years.
Benefits Of EPS Pension:
As per the Ministry of Labour & Employment, the following are the benefits of EPS:
- Member Pension upon superannuation at 58 years of age.
- Early Member Pension from the age of 50 years.
- Disability Pension on permanent and total disablement during service.
- Children Pension for 2 children at a time till the age of 25 years on death of the member.
- Widow/Widower Pension on death of Member or Pensioner.
- Orphan Pension to 2 orphans at a time till the age of 25 years on the death of a member when there is no spouse or on the death of a spouse.
- Disabled Children/Orphan Pension for the entire life of the disabled child/orphan.
- Nominee Pension on the death of a member and paid for life to a person duly nominated by the member in case there is no family as defined under EPS, 1995.
- Pension to dependent father/mother upon death of a member provided there is no family or nominee of the member.
- Withdrawal benefit on exit from service or on superannuation provided member has not rendered service eligible for pension.
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