Pensioners in India are expecting a massive hike in the minimum pension under the EPFO-backed employees' pension scheme (EPS) of 1995. The majority of reports are predicting that the minimum pension could rise to Rs 7,500, a 650% jump from the current minimum pension. In the recent written reply to the Rajya Sabha, the Labour ministry has finally broken the silence over the matter.
EPS-95 Minimum Pension:
The Minister of State for Labour and Employment, Shobha Karandlaje, has shed some light on the minimum pension that is paid to retirees under EPS-95. He answered queries in the Rajya Sabha on July 24. The queries were:
(a) Whether the demand to enhance the minimum pension in the Employees' Pension Scheme (EPS-95) has been under consideration by the Government for a long time.
(b) If so, by when will the government take a decision, especially given mounting pressure from the trade unions and the court judgments?
(c) the constraint in increasing the EPF pension when there are sufficient funds available in the corpus fund and the accumulated unclaimed funds; and
(d) Will the Government expedite a decision given the coming festival season?
In his written reply to the queries, Karandlaje said, "Representations have been received from various stakeholders, including trade unions and public representatives, to increase the minimum pension under the Employees' Pension Scheme (EPS), 1995, from the existing Rs. 1000/- per month."
He explained that the EPS, 1995, is a "Defined Contribution-Defined Benefit" Social Security Scheme.
As per the minister, the corpus of the Employees' Pension Fund is made up of
(i) contribution by the employer @ 8.33 per cent of wages; and
(ii) contribution from Central Government through budgetary support @ 1.16 per cent of wages up to an amount of Rs . 15,000/- per month
"All benefits under the scheme are paid out of such accumulations. The fund is valued annually as mandated under paragraph 32 of the EPS, 1995, and as per the valuation of the fund as on 31.03.2019, there is an actuarial deficit," the minister added.
Despite the actuarial deficit, the minister pointed out that "However, the Government is providing a minimum pension of Rs. 1000 per month to the pensioners under the EPS, 1995 by providing budgetary support, which is in addition to the budgetary support of 1.16 per cent of wages provided annually towards EPS to Employees' Provident Fund Organisation (EPFO)."
Hike In Minimum Pension:
The desire and demand for a minimum pension have been circulating since last year. In February 2024, the Ministry of Labour & Employment informed that representations have been received from various stakeholders, including trade unions and public representatives, to increase the minimum pension under the Employees' Pension Scheme (EPS), 1995, from the existing Rs. 1000/- per month.
In a latest clarification, EPFO revealed that although a High-Level Monitoring Committee had recommended increasing the minimum pension to Rs 2,000 and submitted the suggestion to the Finance Ministry, it was not accepted. EPFO revealed this in a reply to a query on June 18.
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.
How Much Hike Is Expected In the Minimum Pension?
The majority of pensioners and employees' unions are predicting a hike of 650% in the minimum pension to Rs 7,500 from Rs 1,000. However, the government is yet to make a decision on whether it plans to hike the minimum pension under EPS.
If the minimum pension is increased to Rs 7,500, then it will be a breathtaking 650% jump for pensioners who receive Rs 1,000 as of now. However, let us clarify that the government or EPFO has not made any official statement regarding approval of the hike to the minimum pension to Rs 7,500.
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