Govt Reviews Minimum Pension Hike Under EPS

The government has decided to review the demand growing to raise the minimum pension of the Employees' Pension Scheme or EPS. Though a rise is on the cards, no concrete timeline and quantum for the raise has been decided, it was informed by Minister of State for Labour and Employment Shobha Karandlaje in Lok Sabha. Now, EPS 1995 is administered by EPFO and provides a minimum monthly pension of Rs 1,000. This scheme receives the employer's contribution in the form of 8.33 per cent of wages with support of 1.16 per cent of wages from the Central Government. It came up for discussion when Ummeda Ram Beniwal, Member of Parliament sought clarification about the government's proposed revisions of minimum pension under EPS. He sought information about unclaimed accounts in the provident fund, plans for granting dearness allowance (DA) to the pensioners and PSU employees' inclusion within NPS.

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Responding to Beniwal's questions, Karandlaje said EPS is an entirely self-funded scheme with all benefits drawn from accrued contributions. The Central government had earlier increased the minimum pension to Rs 1,000 per month through budgetary support, though there is no provision under the scheme for such financing. Future increases will be based on the financial sustainability of the fund since it is annually valued.

"The fund is valued every year, and extra relief is paid if the position of the fund allows," said the minister. She explained that any further increase would require careful consideration of the scheme's sustainability. The minister clarified that there are no such accounts but some accounts fall into "inoperative," having an undisputed claimants' category. Till 31st March 2024, such accounts are with an amount of Rs 8,505.23 crores. During the past three years, a claim sum of Rs 7,576 crore received for the inoperative accounts had already been settled.

The linking of EPS pensions to the cost-of-living index, as many had advocated, could not be considered. The member said that a High Empowered Monitoring Committee had examined this feasibility in 2018 regarding the addition of DA to pensions and found that it was not compatible with the self-funded character of the scheme.

On the issue of PSU employees being included in the National Pension System, there was no confirmation of such immediate plans but highlighted the ongoing efforts of the government in addressing various concerns of different stakeholders within the pension framework. The government is conscious of the need to raise the minimum pension across the board, but an EPS model to be self-funded will always have inherent limitations. There are no unclaimed EPF accounts, and what is being emphasized is the settlement of inoperative accounts. That is part of the streamlining of fund management. Meanwhile, pensioners wait in hope for concrete announcements from the government weighing the viability of reforms against the health of the EPS.