EPFO higher pension news update: Frequent withdrawal by salaried employees and low monthly pension contributions are some of the reasons why pensions under EPS are low for most employees, according to the Government.
In a written reply to a query in the Lok Sabha on 16th march, Union Minister of State for Labour and Employment, Rameshwar Teli, said: “One reason for low pension is frequent withdrawals from the scheme. During 2021-2022, around 37.74 lakh withdrawal benefit claims amounting to Rs. 7988.89 crore were settled. Another reason for low pension is receipt of monthly pension contribution in respect of a large number of members on very low monthly salary which results in low pensionable salary and therefore calculation of pension towards lower side.”
Employees’ Pension Scheme (EPS), 1995 is a funded scheme where the benefits are paid from the Pension Fund.
Why EPS benefit could not be increased?
“As the Pension Fund was/is in actuarial deficit the scheme benefits could not be increased. However, the Government, for the first time, in the year 2014, provided a minimum pension of Rs. 1,000/- per month to the pensioners under the EPS, 1995 by providing budgetary support, which was in addition to the budgetary support of 1.16% of wages provided annually towards EPS to Employees’ Provident Fund Organisation (EPFO),” the minister said in reply to another query.
Also Read: EPF interest credit: Will you lose money if the Provident Fund (PF) passbook is not updated?
How many people have applied for higher pension
As many as 1,20,279 employees applied for higher pension option online at the Unified Portal of Employees’ Provident Fund Organisation (EPFO) till 9th March 2023, according to the Government, the minister said in reply to another query.
The EPFO higher pension option has been made available to employees following a Supreme Court judgement on the matter. (Check details).
“The total number of beneficiaries in accordance with the directions given in the Hon’ble Supreme Court judgement dated 04.11.2022 will depend upon the employees exercising joint option and the number of such employees who are eligible. The quantum of monthly pension pay out for such pensioners will depend upon the number of eligible members exercising the option for pension at higher salary,” the minister said.
“Till 09.03.2023, 1,20,279 applications/ joint options were applied online at Unified Portal of Employees’ Provident Fund Organisation (EPFO) by the employees,” he added.
Who can apply for pension on higher wages
“As per the EPFO’s instructions based on Supreme Court order dated 04.11.2022, joint option for pension on higher wages is available to only those employees where employee’s and employer’s contributions were on actual salary exceeding the prevalent wage ceiling and who did not exercise joint option under the para 11(3) of the pre amendment Employees’ Pension Scheme (EPS), 1995 (since deleted) while being members of the EPS, 1995 and were members prior to 01.09.2014 and continued to be members on or after 01.09.2014,” the minister said.
No provision to allow self-contribution to pension scheme
The Minister further said there is no provision to consider granting an option to those employees, to enable them to contribute towards Pension Scheme on their own, where employers are not contributing on actual salary.