The Labor Ministry and the Employees’ Provident Fund Organization (EPFO) are considering making some changes to the Employees’ Pension Scheme to make it more efficient and potentially increase resources on raising funds for higher monthly pensions. This agenda is expected to be discussed in the meeting to be held in February.
New Delhi. Employees working in the private sector can get a big gift. The government is preparing to give more pension to the employees who contribute to the Employee Provident Fund. The Labor Ministry and the Employees’ Provident Fund Organization (EPFO) are considering making some changes to the Employees’ Pension Scheme (EPS) to make it more efficient and potentially increase resources on raising funds for higher monthly pensions.
This issue was discussed in the last meeting of the Central Board of Trustees of EPFO, it is expected to be discussed in the agenda in the next meeting to be held in February. Decrease in contribution by existing members and increase in the number of pensioners amid demand for hike in minimum monthly pension has raised concerns over the utility of the social security scheme.
Suggestion to increase pension in view of rising inflation
Pensioners of EPS get a minimum guaranteed pension of Rs 1,000 and suggestions have been made to increase it in view of rising inflation. Meanwhile, the recent Supreme Court judgment on higher pension has raised the likely expenditure of EPFO on pension.
Actuarial calculations show that there is a mismatch between the minimum and required contributions for the scheme. To earn a minimum monthly pension of ` 1,000 with 10 years of pensionable service, a member should contribute at least ` 711 per month for 10 consecutive years. Out of 61.2 million members contributing to the scheme in 2021-22, 34.7 million members contributed less than `700 per month towards pension.
As per the provisions of the scheme, the present statutory wage limit is `15,000 per month, with a monthly contribution of `1,250 by a member. There has also been a steady increase in the number of pensioners and pension disbursed under the scheme.
As on March 31, 2022, the EPS had about 7.3 million pensioners with a corpus of ₹6.89 trillion, an increase of about 86.41% since 2016-17. It had disbursed `20,922 crore in 2021-22 as pension and exit benefits and `20,378 crore in 2020-21.
