EPFO: Guaranteed minimum pension of Rs 9,000 under EPS likely? Here’s what new proposal reveals

Since the Centre’s announcement of the Unified Pension Scheme (UPS), which assures a guaranteed minimum pension for central government employees, private sector employees covered under the Employees’ Provident Fund Organisation (EPFO) have also started raising their demand for an increased monthly pension under the Employee’s Pension Scheme (EPS).

Recently, the Chennai EPF Pensioners’ Welfare Association wrote a letter to Union Minister for Labour and Employment Mansukh Mandaviya, seeking to raise the minimum monthly pension to Rs 9,000 with dearness allowance, according to media reports.

In this letter, the association highlighted that there were about 75 lakh pensioners covered under the EPS. It contrasted this with the recent announcement of the Unified Pension Scheme (UPS) for government employees, which is set to benefit 23 lakh people, noting that the EPS 1995 pensioners have been overlooked.
   
The Chennai EPF Pensioners’ Welfare Association also wants this minimum pension hike matter to be taken to Prime Minister Narendra Modi.

Also read – EPFO: What will be maximum pension if wage ceiling for PF contribution hiked to Rs 21,000?

EPS-95 National Agitation Committee seeks Rs 7,500 minimum pension

In July, pensioners body EPS-95 National Agitation Committee staged a protest in the national capital to press for a minimum monthly pension of Rs 7,500.

Maharashtra-headquartered EPS-95 National Agitation Committee members include around 78 lakh retired pensioners and 7.5 crore working employees of industrial sectors.

What is the minimum pension fixed under EPS95?

In September 2014, a minimum pension of Rs 1,000 per month for pensioners covered under Employee’s Pension Scheme (EPS), 1995, was announced by the central government.

However, the labour ministry last year sent a proposal to the finance ministry, seeking to double the pension to Rs 2,000 per month under the EPS-95. But the proposal was not approved by the finance ministry.

What is the formula for calculating pension under the EPS scheme?

The current formula for calculating pension under the EPS scheme is – (Basic salary of 60 months X service period) divided by 70.

Also read: EPS Rules: No need to wait till age 58, EPFO members can withdraw early pension – Find out how

EPF and EPS contributions

Under the EPFO rules, organisations which employ more than 20 employees have to deduct provident fund from the salary of their employees. Employees must contribute 12% of their basic pay towards the provident fund regulated by the EPFO, while employers have matched this 12% contribution. The employer’s contribution gets divided into two parts – 8.33% of the contribution goes towards Employees’ Pension Scheme (EPS) and 3.67% is deposited with the EPF scheme.

Proposal to raise wage ceiling under EPFO to Rs 21,000

Meanwhile, the labour ministry has proposed to the finance ministry to consider raising the wage ceiling from Rs 15,000 to Rs 21,000 for calculating employees’ provident fund contributions, according to sources.

Since September 1, 2014, the wage ceiling for calculating the EPS pension has been capped at Rs 15,000. However, the proposed increase could provide much-needed relief and enhanced benefits to employees.