EPFO Update: The Modi government has once again clarified its position on the long-pending demand to raise the minimum pension under the Employees’ Pension Scheme (EPS), 1995.
Responding to a question in the Rajya Sabha, the Labour Ministry said there is no separate proposal or timeline at present to increase the minimum EPS pension from the existing Rs 1,000 to Rs 7,500, stressing that any decision must factor in the long-term financial sustainability of the pension fund.
The issue was raised by Rajya Sabha MP Dr Medha Vishram Kulkarni, who highlighted the growing hardship faced by EPS-95 pensioners amid rising inflation.
What the MP asked in Parliament
Dr Kulkarni sought to know whether the government was aware of the ongoing demand from lakhs of EPS-95 pensioners in Maharashtra to increase the minimum monthly pension from Rs 1,000 to Rs 7,500, calling the current amount inadequate in today’s cost-of-living conditions.
She also asked whether representations had been received from Maharashtra-based employee unions and pensioners’ associations during 2025, what action had been taken on those demands, whether any actuarial study had been conducted specifically for Maharashtra pensioners, and whether the government had any timeline in mind for revising the minimum pension under EPS-95 while ensuring the scheme’s financial sustainability.
Labour minister’s reply: how EPS works
Replying to the questions, Minister of State for Labour and Employment Sushri Shobha Karandlaje explained that the Employees’ Pension Scheme, 1995 is a defined contribution–defined benefit social security scheme.
She said the Employees’ Pension Fund corpus is built from two sources: the employer’s contribution of 8.33% of wages, and a 1.16% contribution by the Central Government on wages up to Rs 15,000 per month.
All pension benefits under EPS-95 are paid out of this fund.
The minister also clarified that the government currently provides a minimum pension of Rs 1,000 per month to EPS pensioners through budgetary support. This support is over and above the Centre’s 1.16% wage contribution to the pension scheme routed through the Employees’ Provident Fund Organisation.
Fund valuation and sustainability
Addressing concerns around fund viability, the minister said the pension fund is valued every year, as mandated under Paragraph 32 of EPS, 1995. The purpose of this valuation is to assess the long-term sustainability of the fund by comparing expected inflows from contributions with future outflows in the form of pension payments.
She underlined that the government remains committed to providing robust social security coverage through the EPF Scheme, 1952, EPS-95 and EDLI schemes, but decisions are taken keeping in mind both future liabilities and fund sustainability.
Demand acknowledged, but no state-wise fund
The Labour Ministry also acknowledged that representations have been received from various stakeholders, including trade unions and public representatives, seeking an increase in the minimum EPS pension from the current Rs 1,000 per month.
However, the minister made it clear that there is no separate state-wise pension fund under EPS-95. This means demands raised by pensioners in Maharashtra or any other state are examined at the national level, as the scheme is centrally pooled.
A long-standing demand by unions
The demand to raise the minimum EPS pension is not new. For several years now, labour unions and pensioners’ bodies across the country have been urging the government to revise the Rs 1,000 minimum pension, which was last fixed more than a decade ago. From time to time, the issue has also been raised in Parliament, with lawmakers pressing the Centre to factor in inflation and rising healthcare costs faced by elderly pensioners.
Despite repeated assurances that the matter is under consideration, the government has consistently maintained that any hike must be balanced against the financial health of the pension fund.
Bigger EPFO reform debate: wage ceiling may be raised
Alongside the pension debate, another major issue linked to EPFO coverage is gaining attention — the proposal to raise the wage ceiling for mandatory EPF and EPS contributions.
Currently, mandatory contributions apply only to employees with basic wages up to ₹15,000 per month, a limit fixed around 12 years ago. Media reports suggest that the Centre is now considering hiking this ceiling to Rs 25,000.
If this change is implemented, it could have a significant impact. Many organised sector employees with basic pay above Rs 15,000 are currently outside the mandatory EPF and EPS net. A higher wage ceiling would bring a much larger section of salaried employees into the social security framework, strengthening both provident fund savings and pension coverage over the long term.
For now, however, on the key question of raising the minimum EPS pension to Rs 7,500, the government’s latest parliamentary reply makes it clear that while demands are on record, any decision will hinge on actuarial assessments and the sustainability of the pension fund rather than immediate timelines.