The Central Board of Trustees (CBT), the highest decision-making body of the Employees’ Provident Fund Organisation (EPFO), is scheduled to meet in Bengaluru on October 10 and 11. This meeting is likely to discuss a proposal to increase the minimum pension from Rs 1,000 to Rs 2,500 per month, according to reports.
Minimum pension expected to increase after 11 years
The minimum pension under the Employees’ Pension Scheme (EPS-95) under the EPFO is currently Rs 1,000 per month. This was fixed in 2014 and has remained unchanged since then.
Various employee organisations have long been demanding that the Rs 1,000 amount is too low given the current inflation. Trade unions and various associations of pensioners have long been demanding an increase in the pension amount to Rs 7,500 under the Employees’ Pension Scheme (EPS). Reports, however, suggest that the CBT may not hike the pension by 7.5 times and instead may consider increasing it to Rs 2,500.
How is EPFO pension determined?
Pension under EPS is calculated using a fixed formula:
Pension = (Pensionable Salary × Pensionable Service) ÷ 70
Pensionable salary is the average basic salary + DA over the last 60 months of service, capped at Rs 15,000. Pensionable service is the total years of service, rounded up if it’s 6 months or more, and you need at least 10 years of service to be eligible for the pension.
The maximum limit for pensionable salary is Rs 15,000 per month. This means that if a member has served for 35 years, he or she can receive a pension of approximately Rs 7,500 per month.
Eligibility for pension
A minimum of 10 years of continuous service is required to receive a pension under the EPS.
Members are entitled to a regular pension upon attaining the age of 58.
If a member leaves the job before this date, they receive withdrawal benefits or a reduced pension.
EPFO 3.0: What can members expect?
Another major agenda of this meeting is the EPFO 3.0 project. Under EPFO 3.0, there are plans to make the organisation completely digital and paperless.
This could include features such as direct PF withdrawal from ATM, instant PF withdrawal through UPI, real-time claim settlement and correction facility, easy settlement of death claims online and automatic data integration.
Big Indian IT firms like Infosys, Wipro, and Tata Consultancy Services (TCS) have been tasked with responsibilities to manage and implement this large-scale technological upgrade. The project is now likely to take off next year only amid delays due to technical testing and system integration challenges.
What could be decided in the meeting?
In addition to discussing and taking a decision on increasing the minimum pension, the board may also discuss digital reforms, investment policy, and the pension scheme’s fund structure.
Although the final decision will require government approval, the outcome of this meeting could impact the future of millions of pensioners and employees.
Employee expectations
Employee unions say the minimum pension of Rs 1,000 no longer holds water. “No one can survive on this amount. The government should increase it substantially, keeping in view the inflation,” said a labour union representative.
Now, all eyes are on the CBT meeting on October 10-11, where one can expect major relief for employees to be announced.