EPFO: The government is looking to hike the minimum pension of EPS from Rs 1,000. However, the debate is on what should be the minimum amount. As per reports, EPFO has likely proposed Rs 7,500 as the minimum pension hike under EPS, but there are demands from unions of Rs 9,000 pension. The government has yet to give an official statement in this regard.
EPFO Minimum Pension:
Under the PM Narendra Modi government, the Ministry of Labour & Employment provided the first minimum pension of Rs 1,000 per month to the pensioners of the Employees' Pension Scheme (EPS), 1995. This has been in place since September 1, 2014.
EPS 1995 is defined as a Contribution-Defined Benefit Social Security Scheme.
As of now, the corpus of the EPS is based on --- (i) contribution by the employer @ 8.33 per cent of wages; and (ii) contribution from the Central Government through budgetary support @ 1.16 per cent of wages, up to an amount of Rs.15,000/- per month.
Since then, the minimum pension under EPS has not been revised.
Earlier, post-Covid, the Labour Ministry revealed that representations have been received for enhancement of minimum pension under EPS, 1995.
Accordingly, the pension body, EPFO has reportedly appointed a parliamentary committee to conduct a third-party review of EPS scheme of 95. Headed by BJP MP Basavaraj Bombay, the committee has reportedly sought the Union Labour Ministry to take action on the matter. The goal of third-party review is to put in place independent experts and gather recommendations regarding EPS which is expected to include revision in EPS.
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EPS Minimum Pension Hike To Rs 7,500:
As per the Bajaj Finserv website: both salaried employees and retirees are closely watching for updates that could offer much-needed financial relief. Recent EPFO developments highlight a growing demand to raise the current minimum pension from Rs 1,000 to Rs 7,500 per month.
More than 6 million pensioners are expected to benefit from this new change. The implementation is predicted from May 2025 onward. However, EPFO is also expected to add dearness structure to pensions.
Here is a the breakdown of how hike in minimum pension along with dearness allowance will enhance the cost of living of government employees and retirees:
Table Image Source: Bajaj Finserv Website
EPS Minimum Pension Hike To Rs 9,000:
However, there are demand for hiking minimum pension to Rs 9,000. Pensioners are demanding that this decision be taken in the context of the current increased costs.
If a Rs 9,000 pension is announced then that would mean an 800% hike in the minimum pension from Rs 1,000.
If the minimum pension is hiked to Rs 7,500, then it will be a whopping 650% increase from Rs 1,000.
Benefits under Employees' Pension Scheme (EPS-95)
The different categories of pension and withdrawal benefits available under EPS, as per Labour Ministry are:
- Member Pension upon superannuation at 58 years of age.
- Early Member Pension from age of 50 years.
- Disability Pension on permanent and total disablement during service.
- Widow/Widower Pension on death of Member or Pensioner.
- Children Pension for 2 children at a time till the age of 25 years on death of the member.
- Orphan Pension to 2 orphans at a time till the age of 25 years on death of a member when there is no spouse or on death of spouse.
- Disabled Children/Orphan Pension for the entire life of the disabled child/orphan.
- Nominee Pension on death of 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.
Who Is Eligible For Pensions?
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.
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