The Central Board of Trustees (CBT), the top decision-making body of the Employees’ Provident Fund Organisation (EPFO), is likely to announce mega benefits for EPFO account holders on October 13. From EPFO 3.0 reforms to technology upgrades, many are hoping for a key decision on the minimum pension under the Employees Pension Scheme (EPS) 1995 which has not been revised in over 10 years.
As per reports, the issue of minimum pension is likely not in the agendas to be discussed on Monday; however, a Business Today report cited sources indicating the EPS pension could be brought up for discussion.
Many employees and trade unions have requested to hike the minimum pension for quite a few years now. However, the chances of the minimum pension being hiked are low since the government has to bear the cost of it. If the government hikes the minimum pension, it will be the first revision in 11 years under the EPS account.
Among the popular expectations for minimum pension is Rs 2,500 from the current Rs 1,000, which would be a 150% hike. However, over the past few months, expectations of Rs 7,500 as the minimum pension of EPS have taken round as well.
EPS Minimum Pension Hike: Rs 2500 Or Rs 7500
As per recent reports, EPFO may hike minimum pension to Rs 2,500 by this weekend, which will be an early Diwali gift. If this does happen, then minimum pension would rise by 1.5 fold or 150% from current pension of Rs 1,000.
However, earlier, various trade unions and employees had expressed their demand for minimum pension of Rs 7,500 from the current. But the chances of Rs 7,500 minimum pension is low as the burden on government’s actuarial deficit will heightened. Nonetheless, if minimum pension does rise to Rs 7,500, then it will be a 7.5 times or 750% increase from current pension.
EPS-1995 Pension:
The EPS, 1995 is a “Defined Contribution-Defined Benefit” Social Security Scheme. The corpus of the Employees’ Pension Fund is made up of (i) contribution by the employer @ 8.33 per cent of wages; and (ii) contribution from Central Government through budgetary support @ 1.16 per cent of wages up to an amount of Rs.15,000/- per month, as per government website.
In July month, Minister of State for Labour and Employment Sushri Shobha Karandlaje in written reply to a question in Rajya Sabha highlighted that the Government is providing a minimum pension of Rs. 1000 per month to the pensioners under the EPS, 1995 by providing budgetary support, which is in addition to the budgetary support of 1.16 per cent of wages provided annually towards EPS to EPFO.
Who is eligible for pension?
– Any member of the EPS,1995 becomes eligible for pension on attaining the age of 58 years with 10 years of eligible service.
– A member, if not in employment, can also opt for reduced pension, if he/she attains the age of 50 years with 10 years of eligible service.
EPS Pension Scheme Benefits:
1. Superannuation Pension: Payable to members who retire at 58 years with at least 10 years of eligible service. Calculated as (Pensionable Salary × Pensionable Service) / 70.
2. Early Pension: Reduced pension for members retiring between 50-58 years, with a 4% reduction per year below 58. Payable if the member has rendered eligible service of 10 years or more.
3. Monthly Member’s Pension: Calculated as (Pensionable Salary × Pensionable Service) / 70.
4. Minimum Pension: Rs1,000 per month, subject to deductions for commutation or early pension.
5. Widow Pension: 50% of the member’s pension or Rs450/month, whichever is higher.
6. Children Pension: 25% of widow pension per child (max 2 children).
7. Orphan Pension: 75% of the widow pension if no surviving spouse (max 2 orphans).
8. Permanent Total Disablement Pension: Minimum Rs250/- per month if the member is permanently disabled during service.