EPS Pension Hike: The government is working on a plan to increase the minimum pension under EPS from ₹ 1,000 to ₹ 3,000. This will directly benefit 36.6 lakh pensioners, although deliberations are still going on regarding its cost and timing.
EPS Pension Hike: The central government is considering increasing the minimum pension under the Employees’ Pension Scheme (EPS) from the current ₹ 1,000 per month to ₹ 3,000. A senior government official told Moneycontrol that this decision may come into effect in the next few months. This initiative is coming at a time when there is a growing concern over the continuous rise in inflation and social security of the elderly.
What is EPS?
EPS is a retirement scheme for organized sector employees in India. It is run by the Employees’ Provident Fund Organization (EPFO). Its purpose is to provide a fixed monthly income to private sector employees after retirement. The fund for this scheme comes from the contribution of the employer i.e. the company. Out of its total 12% contribution to EPF (Employees’ Provident Fund), 8.33% goes to EPS and the remaining 3.67% goes to EPF.
The government official said, “We are preparing to increase the minimum pension to ₹ 3,000 per month. This was pending for a long time.” Earlier in 2020, the Labor Ministry had sent a proposal to increase the minimum pension to ₹ 2,000 to the Finance Ministry, but it was not approved.
There is also a demand for ₹ 7,500 pension
During the pre-budget discussions in 2025, a delegation of EPS retired employees had demanded from Finance Minister Nirmala Sitharaman to increase the minimum pension to ₹ 7,500, but did not get any assurance.
At present, the total fund of EPS is more than ₹ 8 lakh crore. There are about 78.5 lakh pensioners under this scheme. Out of these, 36.6 lakh people are getting a minimum pension of just ₹ 1,000 per month.
Deliberation continues on financial impact
The official said the labour ministry is currently evaluating the additional cost associated with implementing the ₹3,000 pension. In FY2023-24, the government spent ₹1,223 crore to provide minimum pension to EPS pensioners, which is 26% more than the ₹970 crore spent in FY23.
Since September 2014, the government has been providing a subsidy to ensure a minimum pension of ₹1,000, i.e. if a member’s pension is less than ₹1,000, the government pays the difference out of its own pocket.
Opinion of Parliamentary Committee and Experts
Recently, a parliamentary committee headed by BJP MP Basavaraj Bommai had recommended the Labour Ministry to immediately increase the minimum EPS pension as inflation has risen rapidly.
Akhil Chandna, partner, Grant Thornton India, said, “If the minimum pension is increased, it will be a welcome move, especially for low-income group retired employees and their dependent families.”
Sandeep Vempati, an economist associated with the BJP, told Moneycontrol that the retail inflation rate (CPI) has increased by 72% between March 2014 and March 2025. The International Labor Organization (ILO) also advocates linking pension to inflation. However, due to global economic uncertainty and the government’s fiscal strategy, there is confusion over the timing of this proposal and the amount of pension.
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