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FinMin rejects proposal to double minimum pension amount under EPS

The Union finance ministry has rejected a proposal sent by the labour ministry to double the monthly minimum pension amount to Rs 2,000 under the Employee Pension Scheme (EPS).

The Central Board of Trustees (CBT), the apex decision-making body of the Employee Provident Fund Organisation (EPFO), was apprised of the proposal s rejection during a meeting on Saturday. 

According to the recommendations made by a highly-empowered monitoring committee constituted by the government, a proposal to increase the minimum pension under EPS from Rs 1,000 to Rs 2,000 per month, by providing additional budgetary support, was sent to the ministry of finance. The ministry of finance did not agree to it, sources close to the development said.

Data sourced from the social security organisation's annual report for FY23 shows that of the total 7.55 million pensioners under the scheme, 3.64 million received a monthly pension of up to Rs 1,000, followed by 1.17 million pensioners, who received between Rs 1,001 and Rs 1,500. Around 868,000 pensioners received between Rs 1,501 and Rs 2,000 a month. Only 26,769 pensioners got above Rs 5,000 per month.  

In meetings, it has been our demand to raise the minimum pension amount. The pension corpus is valued annually and additional reliefs are paid if the position of the fund so permits.

Since 2000, the fund had run into deficit in most of the valuations done and no additional relief could be provided. However, the Centre enhanced the minimum pension to Rs 1,000 by providing budgetary support in 2014. Keeping in view the widespread demand, the minimum pension should be raised further, a CBT member, who attended the meeting, said.

The EPS 1995 is a self-funded scheme with contributions equivalent to 8.33 per cent of the monthly wages from the employer's share as well as 1.16 per cent of the monthly wages (limited to the amount payable on salary of Rs 15,000) by the central government.

In March 2022, the Parliamentary Standing Committee on Labour had asked the labour ministry to pursue the matter with the ministry of finance for obtaining adequate budgetary support, as the Rs 1,000 monthly pension is grossly inadequate .

Earlier on Saturday, the CBT held its 235th meeting. It recommended a three-year high interest rate of 8.25 per cent for FY24 for its over 290 million total subscribers. Of this, around 68 million are active contributing subscribers.

With this payout, the EPFO is expected to retain a surplus of Rs 278 crore in FY23 as the board recommended a distribution of Rs 1.07 trillion to EPF members accounts. This is on a total principal amount of around Rs 13 trillion in 2023-24. dt. 12.02.2024

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