Monthly wage ceiling for EPFO schemes raised to Rs 15,000

Written by Press Trust of India | New Delhi | Updated: Aug 29 2014, 04:50am hrs
MoneyThe move to enhance the minimum wage ceiling to Rs 15K per month is expected to bring 50 lakh additional formal sector workers under EPFO. (File photo)
The much-awaited minimum monthly pension of Rs 1,000 and a higher wage ceiling of Rs 15,000 for social security schemes run by retirement fund manager EPFO will be implemented from September 1.

The government's decision to fix pension entitlement of Rs 1,000 under the Employees' Pension Scheme 1995 (EPFS-95) will immediately benefit 28 lakh pensioners who get less than this amount at present.

The move to enhance the minimum wage ceiling for becoming a subscriber of Employees' Provident Fund Organisation to Rs 15,000 per month is expected to bring 50 lakh additional formal sector workers under the ambit of the body.

"The government has notified enhancement of wage ceiling to Rs 15,000 per month, fixed minimum monthly pension at Rs 1,000 under EPS-95 and enhanced the maximum sum assured under the Employees' Deposit Linked Insurance (EDLI) Scheme to Rs three lakh," EPFO's Central Provident Fund Commission K K Jalan told PTI.

Jalan said: "Now the maximum sum assured under the EDLI works out to be Rs 3.6 lakh including 20 per cent ad hoc benefit over the prescribed amount under the notification."

This means that in case an EPFO subscriber dies, his family will be entitled to maximum sum assured of Rs 3.6 lakh instead of existing Rs 1.56 lakh.

Jalan said the notification regarding minimum pension, wage ceiling and EDLI would be effected from September 1. Thus all pensioners getting less than Rs 1,000 per month would get at least this much pension from October.

The decision to provide the entitlement under EPS-95 was taken by the Union Cabinet in its meeting held on February 28. But it could not be implemented earlier because the model code of conduct came into force after the general election dates were announced on March 5.

The decision will immediately benefit about 28 lakh pensioners, including 5 lakh widows. In all, there are 44 lakh pensioners under the EPFO scheme.

The EPFO's apex decision making body the Central Board of Trustees (CBT) had met on February 5 and decided to amend the EPS-95 scheme for the purpose.

According to the government notification, the monthly minimum pension entitlement of Rs 1,000 will be available to beneficiaries from September 1 this year to March 31, 2015.

It indicates that the government would have to make another notification in future to continue or enhance the minimum pension of Rs 1,000 under EPS-95.

Under the modified scheme, the minimum monthly pension for widows has been fixed at Rs 1,000 and for children at Rs 250 per month. Similarly the minimum pension entitlement for orphans has been fixed at Rs 750 per month.

The amended scheme also provides that the pensionable salary will be the average monthly pay drawn during the contributory period of service for 60 months preceding the date of exit from membership of the pension fund.

Earlier the pensionable salary, which became the basis for computation of pension, was an average monthly pay drawn for 12 months. The new rule will be effected from September 1.

The notification further provides that those members who had opted for higher pension contributions compared to mandatory requirement as per the prescribed wage ceiling under the scheme, would have to exercise the fresh option in this regard within six month period beginning September 1.

At present, there are EPFO members who had exercised the option of higher contribution towards pension fund under EPS-95. They were contributing for pension on over the Rs 6,500 monthly wage ceiling.