There was a proposal to enhance the minimum pension of Rs. 1,000 per month to Rs. 2,000/3,000 per month under EPS, 1995. However, additional allocations on this count have not been proposed in BE 2022-23. When enquired about the present status in this regard, the Ministry replied as under: -
“The Employees’ Pension Scheme (EPS), 1995 is a ‘Defined Contribution Defined Benefit’ Social Security Scheme. There is a pooled account for providing pension under EPS consisting 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. Amount of member’s pension under the Scheme is determined taking into account the pensionable period of service and pensionable salary as per following formula:
It is evident that the amount of pension is based on a predefined formula. However, the Government, for the first time, provided a minimum pension of Rs. 1000 per month to the pensioners under EPS, 1995 from 01.09.2014 by providing additional budgetary support wherever the pension was falling short as per above determined formula.
Representations have been received from individual pensioners as well as pensioners associations to increase the minimum pension under the Employees’ Pension Scheme (EPS), 1995. Therefore, Ministry constituted a High-Empowered Monitoring Committee for complete evaluation and review of the Employees’ Pension Scheme, 1995 on 04.01.2018.
The Committee had submitted its report on 21.12.2018 to the Government. The Committee had, inter-alia, recommended that minimum monthly member pension payable to the member /widow/ widower pensioners may be raised to at least Rs.2000 per month, provided the Central Government budgetary support is provided for the same on yearly basis. Further, this may be considered along with modification of the scheme prospectively to disallow pre-mature withdrawal benefit and fix a minimum monthly contribution.
Presently, Ministry of Finance has not agreed to any such enhancement in minimum pension beyond Rs. 1000/- per month.”
While tendering oral evidence, the Secretary, MoLE, deposed on the matter as under
"...As everybody is well aware this scheme is run by EPFO. Only in 2014, the Government decided that there will be Rs.1,000 minimum pension and the difference between what EPFO provides, and the Rs.1,000 benchmark would be provided by the government, which the government has been doing. In this budget, government is providing for that. The only issue that to raise this minimum pension limit from Rs.1,000 to Rs.3,000 or more. This issue has been discussed in detail by several committees. Every time this issue came up that EPFO has actuarial assessment for all its pension schemes. Unless and until the actuarial deficit is there we cannot get into revising this pension. So, the only issue is that it has to come from somewhere else. How this is going to happen? This is a very difficult question but we are seized with this issue. In fact, the hon. Minister has created four committees, one of the
committees is on pension. We are looking into this issue how the members of the pension scheme can contribute more."
Relevant Extracts from the Recommendations
Employees’ Provident Fund Organisation (EPFO)
The Committee note that in 2018, the Ministry constituted a High Empowered Monitoring Committee for complete evaluation and review of the Employees Pension Scheme, 1995. That Committee in its report had inter-alia recommended that minimum monthly pension payable to the member/widow/widower pensioner may be raised to at least Rs. 2000/- per month provided annual budgetary provision for the same is made. However, the Ministry of Finance has not agreed to any such enhancement in minimum pension beyond Rs. 1000/- per month.
In this context, the Committee find that the issue has been discussed in detail by several committees which have come to the conclusion that unless and until the actuarial assessment of surplus/deficit of EPFO’s pension schemes are made, revision of the monthly pension of the EPFO members cannot be done. Recently, another Committee has been formed to look into the issue and to ascertain more contribution by the members of the pension scheme. In view of the fact that Rs. 1000/- per month pension which was fixed eight years back appears to be grossly inadequate now, it becomes imperative on the part of the Ministry of Labour & Employment to pursue the matter with the Ministry of Finance for obtaining adequate budgetary support as recommended by the High-Empowered Monitoring Committee besides impressing upon the EPFO to make an actuarial assessment of all its pension schemes so that the monthly member pension is enhanced to a reasonable extent.
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