Demand to increase Minimum Pension under EPF Pension Scheme: Rajya Sabha QA
March 27, 2022
GOVERNMENT OF INDIA
MINISTRY OF LABOUR AND EMPLOYMENT
RAJYA SABHA
STARRED QUESTION NO. 177
TO BE ANSWERED ON 17.03.2022
DEMAND TO INCREASE MINIMUM PENSION UNDER EPF PENSION SCHEME
Will the Minister of Labour and Employment be pleased to state:
(a) whether Government is receiving demands from stakeholders like trade unions and public representatives for increasing the minimum pension under the EPF pension scheme;
(b) if so, the demands of the stakeholders and the response of the Government;
(c) whether Government would consider positively the hike in minimum pension for the EPF holders, in view of rising in the cost of living index and hike in wages;
(d) if so, by when it is expected to be announced; and
(e) if not, the justifiable reasons for not increasing the minimum pension?
ANSWER
MINISTER OF LABOUR AND EMPLOYMENT
(SHRI BHUPENDER YADAV)
(a) to (e): Representations have been received from various stakeholders to increase the minimum pension under the Employees’ Pension Scheme (EPS), 1995.
The Employees’ Pension Scheme (EPS), 1995 is a ‘Defined Contribution-Defined Benefit’ Social Security Scheme. The corpus of the Employees’ Pension Fund is made up of (i) contributions by the employer @ 8.33 percent of wages; and (ii) contributions from the Central Government through budgetary support @ 1.16 percent 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 of 31.03.2019, there is an actuarial deficit.
The amount of a member’s pension under the Scheme is determined by taking into account the pensionable period of service and pensionable salary as per the following formula:
Pensionable Service X Pensionable Salary / 70
It is evident that the amount of pension is based on a predefined formula. However, the Government, for the first time, in the year 2014, provided a minimum pension of Rs. 1000 per month to the pensioners under the EPS, 1995 by providing budgetary support, which was in addition to the budgetary support of 1.16% of wages provided annually towards EPS to Employees’ Provident Fund Organisation (EPFO).
Considering the demands of the Employees’ Pension Scheme (EPS), 1995 pensioners, the Government. constituted a High Empowered Monitoring Committee (HEMC) for the complete evaluation and review of EPS 1995. The Committee considered the issue of dearness allowance under EPS, 1995 and has recommended, inter-alia, that linking the pension admissible under EPS 95 with the cost of living index is not feasible in view of the actuarial position.
Source: Rajya Sabha