The EPS was established in 1995 by Employees’ Provident Fund Organisation (EPFO) and provides a monthly pension in a fixed amount to employees in the organized sector in India. The minimum pension currently stands at ₹1,000, fixed in the year 2014. This amount does not serve any utility today because of a high rate of inflation. Thus, the demand has been made for a major increase in the amount to provide some financial guarantee to the retirees.
Proposed Increase in Pension
The recent developments have culminated into reports that the present EPS minimum pension of ₹1,000 is being considered for a hike that would take it to ₹7,500 per month, a 650% jump. The proposal arises out of sustained demands by the trade unions and pensioners’ associations, stating that the current pension is insufficient to sustain a basic level of living over ever-rising inflation. Some media reports go on to say that a parliamentary committee chaired by BJP MP Basavaraj Bommai is considering the amendment and is pushing for a third-party review of the EPS by the end of 2025.
Current Contribution Structure
While the EPS employee pension scheme charges a contribution of 8.33% of an employee’s wage toward a pension fund from the employer and 1.16% from the central government, pensioners get benefits after an employee has worked for a period of a minimum of ten years and who attains the age of 58. In the employer’s case, 12% of the contribution to the Provident Fund is divided between the EPF at 3.67% and EPS at 8.33%., accordingly, ensuring retirement for a lot of people.
Effect on Pensioners
If sanctioned, the rise to ₹7,500 would greatly improve the lives of over 3.66 million EPS pensioners, which includes 2.06 million who draw the minimum pension from the government, according to FY24. This increased amount could literally keep these retirees alive in the present scenario of hikes in prices. The proposal, however, has not yet been confirmed and is under further evaluation.
Challenges and Expectations
Implementation of this increase faces instalments along with such a backdrop as the huge financial drawback that the exchequer faces, which runs into a fine ₹957 crore a year on the present minimum pension. A further 650% increase would only have served to exacerbate this condition. Pensioners and unions continue to be hopeful, albeit cautiously so, as they await the parliamentary committee’s scrutiny and subsequent government approval of the increase, which will see retirement security enhanced for millions.
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