Having announced guaranteed pension of Rs 3,000 per month for 100 million unorganized workers, the finance ministry has demanded the labor ministry to see if it could fund the proposed hike in minimum pension under the Employee Pension Scheme (EPS) for its subscribers from its own kitty rather than seeking funds from the Centre.
The move comes in the wake of tremendous pressure being constructed upon the government to raise minimum pension of EPS subscribers in line with a guaranteed pension for the unorganized workers.
A high-powered committee on pension had recommended that the government increase the minimum pension to Rs 2,000 from Rs 1,000. The move would have advantages of 4 million subscribers but would cost the exchequer Rs 3,000 crore over and above the annual outgo of Rs 9,000 crore.
“The finance ministry has written to Employees’ Provident Fund Organisation (EPFO) to know what it did to reduce the deficit and whether it could fund the proposed minimum pension hike,” a senior government official told.
“The pension kitty cannot fund this increased pension amount and we will communicate the same to finance ministry soon,” the official said, further saying that this dillydallying on the part of the Centre has delayed the process. “However, we are optimistic it will come through before the elections,” the official said.
The high-powered committee had adviced that the minimum monthly pension is raised to at least Rs 2,000 per month, provided the central government budgetary support is provided for the same on yearly basis. “Further, it may be considered along with modification of the scheme prospectively to disallow pre-mature withdrawal benefit and fix a minimum monthly contribution,” it had further proposed.
The recommendations of the committee will be placed before the sub-committee meeting on Wednesday, following which it will be tabled before the central board of trustees of the EPFO on its next board meeting scheduled for February 21.
Under the Employees’ Pension Scheme (EPS), 1995, a minimum pension of Rs 1,000 per month is given to pensioners since 2014. However, a person getting benefit entitled to the minimum pension do not have to contribute to this pension kitty. Employees are automatically enrolled in the EPS scheme if they are members of the Employees’ Provident Fund scheme. 12% of the employees’ salary every month goes to the EPF account while 12% of the employer’s contribution is divided into 3.67% for EPF, 8.33% for EPS, 0.5% for EDLI and rest for administrative charges. Even the central government contributes 1.16% of the employee’s basic salary plus daily allowance.
Trade unions and the All-India EPS 95 Pensioners Sangharsh Samiti have been demanding for long that the minimum monthly pension is raised from anywhere between Rs 3,000 and Rs 7,500. The current announcement of a guaranteed pension of Rs 3,000 to 100 million unorganized workers has further build up pressure before the EPFO to increase the minimum pension to ensure the scheme stays relevant.
A parliamentary panel had last year demanded the government to assess EPS 1995 and consider revision of the minimum monthly pension of Rs 1,000 saying the social security benefit was too meager to fulfill even the basic needs.
The committee proposed that the government undertake an assessment of the pension scheme with particular reference to the right of sustenance of the pensioners, and based on the outcome consider revision of the amount accordingly.