Good news and big hopes are brewing among pensioners in India!
There’s widespread buzz that the minimum pension paid under the Employees’ Pension Scheme (EPS) of 1995 could see a massive jump, possibly up to Rs 7,500, which would be a staggering 650% increase from the current Rs 1,000. After months of speculation, the government has finally broken its silence on the matter, giving pensioners some much-needed clarity.
On July 24, in a written reply to questions in the Rajya Sabha, the Union Labour Ministry shared some important updates. The Minister of State for Labour and Employment, Shobha Karandlaje, addressed concerns about increasing the minimum pension under EPS-95, which has been a long-standing demand from pensioners and trade unions.
The questions posed to the ministry included whether the government has been considering raising the minimum pension, when a decision might be expected, the hurdles involved, and whether action will be taken before the upcoming festival season. The minister responded that many stakeholders, including trade unions and public representatives, have been urging for a hike. The current minimum pension of Rs 1,000 has been in place since September 2014.
Progress of EPF Hike So Far
EPS-95 is a “Defined Contribution-Defined Benefit” social security scheme. The fund for pension payments is built from contributions by both employers and the government:
- Employer contribution: 8.33% of wages
- Government contribution: 1.16% of wages (up to Rs 15,000/month)
The accumulated funds are used to pay out benefits, and the fund is evaluated annually. As of the latest valuation on March 31, 2019, the fund showed an actuarial deficit, meaning there are some financial gaps.
Despite this, the government continues to provide a minimum pension of Rs 1,000 per month through budget support, a move that’s been ongoing for nearly a decade.
Demand for Increase in Pension
The demand for increasing the minimum pension has been gaining momentum, especially since last year. Many pensioners and unions believe that Rs 1,000 is no longer enough to meet basic needs, especially with rising prices.
In February 2024, the Ministry of Labour and Employment acknowledged receiving multiple requests to hike the minimum pension.
In a recent update, the Employees’ Provident Fund Organisation (EPFO) revealed that a high-level monitoring committee had recommended increasing the minimum pension to Rs 2,000 and had submitted this suggestion to the Finance Ministry. However, the proposal was not accepted so far.
Since the scheme’s inception, the government has maintained the Rs 1,000 minimum pension. This rate has been in effect since September 1, 2014, when the first pension payments under EPS 1995 were made at this level.
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Expected Increase in Pension
Most pensioners and employee unions are hopeful for a massive increase—about 650%—which would raise the minimum pension from Rs 1,000 to around Rs 7,500. This would provide relief to millions of retirees struggling with inflation and rising living costs.
But, as of now, the government has not yet announced any decision on whether or not to implement this hike. The final call depends on various factors, including the fund’s financial health and government policy.
The government’s decision on increasing the minimum pension remains awaited. Pensioners, unions, and stakeholders are pushing for a quick resolution, especially with the festive season approaching, which often prompts government action on social welfare issues.
While the hope for a significant pension hike is high, especially among pensioners and workers’ groups, clarity from the government is still pending. The possibility of raising the minimum pension to Rs 7,500 would be a major win, making life easier for millions of retirees.