EPFO plans to hike minimum pension to Rs.2k

EPFO plans to hike minimum pension to Rs.2k

The Employees Provident Fund Organization (EPFO) is considering an option to double the minimum pension amount to Rs2,000. The financial implications of the move are being measured. There were plans to announce the decision before the strike of central trade unions on September 2. However, sources said, the move might have been held back for a rethink on the financial impact in case of hike in pension.

It started when revised actuarial calculations showed that there was a marginal surplus in the pension fund. EPFO caters to the pension of private sector employees and some PSUs. On the basis of the surplus, it was earlier planned to either increase the pension marginally, taking it to Rs1,250 or provide a one-time benefit. There was also a pending demand to hike the pension to Rs3,000 a month. This led to the option of hiking the pension to at least Rs2,000 a month being considered, said a source. There are around Rs20 lakh pensioners who get the minimum amount of Rs1,000 at present.

However, the ministry of finance has to be taken into confidence before initiating such a move, said a source. The gap is filled by MoF even for paying Rs1,000 as minimum pension. This comes to around Rs1,000 crore a year which is given on piecemeal basis. Once the pension is hiked, the impact will be more. Though the idea has not been entirely shelved, a rethink is under way, said a source.

Meanwhile, the Employees Pension Scheme (1995) Coordination Committee, an association of retired employees, has demanded that government should merge the National Pension Scheme (NPS) with EPS. The former is a contributory pension scheme applicable to government employees having joined service after 2004. “The association argues that since returns on NPS are based on returns on investment which are uncertain, EPS should be preferred. This is because EPS at least guarantees a minimum pension,” said Prakash Pathak, general secretary of the coordination committee.

The coordination committee has been lobbying for implementation of the Bhagatsingh Koshiari Committee recommendations which call for taking the minimum pension to Rs3,000 and also adding dearness allowance to it. The committee’s recommendations also call for adding a health benefit, said Pathak.

“The recommendations have been lying with the government since 2013 for want of a decision. Our association has been taking up the issue at various fora,” said Pathak.

Souce : TOI