The Employees’ Provident Fund Organisation (EPFO) is once again in the spotlight as discussions around increasing the minimum pension under the Employees’ Pension Scheme (EPS), 1995 gain traction.
Stakeholders, including trade unions and employee representatives, have long demanded a revision to the current pension amount. Despite ongoing deliberations, no final decision has been made.
Here’s a detailed look at the latest developments, facts, and figures regarding this crucial issue.
Current Minimum Pension Under EPS-95
The EPS-95, introduced to provide social security to retired employees, currently guarantees a minimum pension of ₹1,000 per month, a figure fixed by the government in September 2014. This scheme is funded by contributions from both employers and the central government:
- Employer Contribution: 8.33% of wages.
- Government Support: 1.16% of wages up to ₹15,000/month.
Although the scheme has supported millions of retirees, its adequacy has been questioned, with inflation and rising living costs reducing its real value over time.
Stakeholder Representations and Employee Demands
Employee unions and pensioners have persistently requested an increase in the minimum pension amount. Many argue that ₹1,000 per month is insufficient for basic living expenses, particularly for elderly individuals reliant solely on EPS benefits. The demands include:
- Doubling the minimum pension to ₹2,000 per month.
- Further increases to reflect current inflation rates.
The Labour Ministry had sent a proposal to the Finance Ministry last year, seeking approval for raising the pension to ₹2,000 per month. However, the proposal was not approved, citing concerns over funding and the actuarial deficit in the pension fund.
Parliamentary Queries on Pension Increase
In a recent Lok Sabha session, Asaduddin Owaisi, Member of Parliament, raised questions about the government’s stance on increasing the pension amount. Key points addressed were:
- Receipt of Representations: Minister of State for Finance, Pankaj Chaudhary, confirmed that representations from stakeholders, including trade unions, had been received.
- Assessment of Proposals: The government acknowledged reviewing these representations but did not provide details on any conclusive findings.
- Actuarial Deficit in the Fund: The Minister emphasized that the pension fund operates as a Defined Contribution-Defined Benefit Social Security Scheme. As of March 2019, the fund faced an actuarial deficit, complicating efforts to increase pension payouts.
Government’s Support Measures to Date
The government has implemented some initiatives to support pensioners under EPS-95:
- 2014 Initiative: For the first time, a minimum pension of ₹1,000 per month was introduced.
- Ongoing Budgetary Support: The government continues to contribute 1.16% of wages annually to support the pension scheme.
Despite these measures, further enhancements to the minimum pension remain a contentious issue.
Challenges in Raising the Minimum Pension
The primary obstacle in increasing the pension amount lies in the funding deficit. The Employees’ Pension Fund relies on contributions and government support, but the growing number of retirees and limited fund contributions create financial strain. Key challenges include:
- Actuarial Deficit: A shortfall in the fund’s valuation as of March 2019 hinders the feasibility of higher payouts.
- Limited Budgetary Space: The Finance Ministry has expressed reservations about additional financial allocations to double the pension amount.
What Lies Ahead for Pensioners?
Although no final decision has been made, the government has shown a willingness to consider the demands of pensioners and trade unions. However, balancing fiscal responsibility with social welfare remains a significant hurdle.
| Aspect | Current Status | Proposed Change | Challenges |
|---|---|---|---|
| Minimum Pension Amount | ₹1,000/month (fixed in 2014) | Increase to ₹2,000/month | Actuarial deficit in fund |
| Employer Contribution | 8.33% of wages | No changes proposed | Limited employer capacity |
| Government Contribution | 1.16% of wages up to ₹15,000/month | Possible budgetary increase | Budgetary constraints |
| Representations Received | From trade unions and stakeholders | Under review | No conclusive findings yet |
While the government has acknowledged the growing demand for an increase in the minimum pension under EPS-95, significant financial and actuarial challenges remain.
The ongoing deliberations reflect the complexities of balancing stakeholder needs with fiscal prudence. Pensioners and trade unions continue to advocate for a revision, hoping for a favorable outcome in the near future.
For now, the minimum pension remains at ₹1,000 per month, with no immediate plans for an increase.
What is the current minimum pension under EPS-95?
The current minimum pension is ₹1,000 per month, fixed in 2014.
Has the government approved an increase in the pension amount?
No, the government has not approved any increase in the minimum pension amount as of now.
What challenges prevent an increase in the pension amount?
The main challenges include an actuarial deficit in the pension fund and limited budgetary space for additional financial support.
