Finance ministry mulls hiking minimum pension under EPS

  • 1

New Delhi, Jan 24: The government is mulling doubling the minimum pension under the Employees’ Pension Scheme to Rs 2,000 per month, a move that will benefit over 4 million workers.
Those part of the Employees’ Provident Fund Organisation (EPFO) automatically become subscribers to the pension scheme.
A high-level labour committee put forth a proposal to raise the pension, which is being “actively” considered by the finance ministry, two of the committee members said.
The government spends about Rs 9,000 crore per annum on pensions under the Employee Pension Scheme. This figure will go up to Rs 12,000 crore if the proposal is accepted. “It is very clear that with the existing kitty, it will not be possible to bear the additional burden on account of higher pension,” said one of the persons quoted above. “Hence, the ball is in the court of the finance ministry to decide if the government is willing to bear the cost.”
The committee, constituted last year under the additional secretary of labour, was asked to evaluate and review the Employees’ Pension Scheme, a senior government official said.
The other committee member quoted above said the finance ministry may impose a rider prohibiting beneficiaries from withdrawing the pension part of their provident fund kitty till the age of retirement if they wish to avail the higher pension. The condition that the subscriber cannot withdraw the amount prematurely will, “over a period of time, give us enough funds to sustain the scheme on our own,” this person said.
There are around 6 million pensioners, of which about 4 million are getting less than Rs 1,500 per month. Of these, 1.8 million are the existing beneficiaries under the minimum pension of Rs 1,000. The government has about Rs 3 lakh crore of pension funds.
The government has been under pressure from trade unions and the All India EPS 95 Pensioners Sangharsh Samiti to raise the minimum monthly pension to anything between Rs 3,000 and Rs 7,500. Even a parliamentary panel had recently asked the government to assess Employees’ Pension Scheme and consider revision of the minimum monthly pension, arguing that the existing social security benefit is too meagre to fulfil even the basic needs.