Business: Ever since the announcement of the Unified Pension Scheme (UPS) by the Centre, private sector employees have been pressing for increased monthly pension under the Employees’ Pension Scheme (EPS). Under the UPS, government employees are entitled to a monthly pension on retirement, which is 50% of their last-drawn basic pay. The minimum pension guaranteed is fixed at Rs 10,000 per month. This pension scheme includes adjustment for inflation based on the CPI- Industrial Workers Index. It is important to note that only employees who have completed 25 years of service will be eligible for full pension, which is 50% of their basic pay.
The Chennai EPF Pensioners Welfare Association has recently written to Union Labour and Employment Minister Mansukh Mandaviya, advocating for increasing the minimum monthly pension for pensioners under the EPS to Rs 9,000, along with dearness allowance. The association stressed the inclusion of about 75 lakh pensioners under EPS and compared it with the Unified Pension Scheme (UPS) launched for government employees, which was designed to benefit 23 lakh individuals. The letter underlined the neglect faced by EPS 1995 pensioners in view of this new initiative. Further, the Chennai EPF Pensioners Welfare Association expressed its desire to raise the matter of increasing the minimum pension before Prime Minister Narendra Modi for consideration.
EPFO Pension Calculation
Members of the Employees’ Provident Fund Organisation (EPFO) are eligible for pension on retirement. As per the existing rules, both the employee and the employer allocate 12% of the basic salary and dearness allowance to the EPF. The employer’s 12% contribution is divided, of which 8.33% is directed towards the Employees’ Pension Scheme (EPS) and the remaining 3.67% goes towards the EPF. It is noteworthy that the 8.33% contribution to EPS is limited to a maximum of Rs 15,000, no matter how high the employee’s salary is. This limit on EPS contribution was imposed in 2014 after an amendment to the EPS guidelines.
Prior to the 2014 EPS amendment, employees had the option to opt for increased levels of EPS contribution.
In September 2014, the central government had announced a minimum pension of Rs 1,000 per month for pensioners covered under the Employees’ Pension Scheme (EPS), 1995. Since then, this amount has not been revised.
