EPFO minimum pension
Lakhs of EPS-95 pensioners of the country have been asking the same question for years whether their minimum pension will increase by ₹ 1,000 or not? Inflation is continuously increasing, from medicines to everyday things have become expensive, but there has been no major increase in pension for years. This is the reason why when this issue was raised again in Parliament, it became a topic of discussion.
At present, the government provides additional budget support for the minimum pension of ₹1,000. That means this amount is not received directly from the fund but with the help of the government. If in future it has to be increased to ₹ 7,500 or more, then it will be necessary to plan a huge budget and funding for it.
Pension calculation formula of Rs 7500
EPFO’s pension is determined under a formula, this formula is (Monthly Pension = (Pensionable Salary × Pensionable Service) / 70). In which your monthly pension, pensionable salary, pensionable service has to be divided by 70. The amount that comes out after this is your pension amount.
What to do if there is an increase
If in future the government decides to give pension of ₹7,500 or more, then pensioners will have to update their EPF/EPFO details. Apart from this, as per the existing rules, to get pension from EPFO, pensioners must first become a member of EPFO and must have completed at least 10 years of eligible service. For regular pension, you should be 58 years of age at the time of retirement.
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What did the government say on increasing the minimum pension?
However, the Central Government has currently made it clear that no proposal to increase it to ₹7,500 is currently under consideration. The Minister of State for Labor and Employment clarified that at this time it is not easy to increase the pension due to lack of funds. The contribution coming to the EPS fund is not sufficient to meet the future pension demand. Simply put, due to actuarial deficit i.e. financial shortage, there is no scope for big increase at present.
How does funding work in EPS pension?
The employer contributes 8.33 percent and the central government contributes 1.16 percent to the EPS pension fund. This money is distributed in the form of pension in future. Because the current position of the fund is not sufficient, there is a ban on increasing the pension. Apart from this, EPS is a contribution based scheme, which is not directly linked to salary, hence the provision of DA i.e. dearness allowance is also not included in it.
Pensioners’ demands and government’s stance
Thousands of pensioners say that ₹1,000 is too little for today’s expenses. He says that the minimum pension should be at least ₹7,500 to ₹9,000, and DA should also be available along with it. Demonstrations and demand letters have been given several times, but at present the government has not shared any concrete plan, timeline or financial model.