The Employees’ Pension Scheme (EPS-95), which is supervised by the Employee’s Provident Fund Organisation (EPFO), delivers a monthly pension benefit to employees in the organised sector on the occasion of retirement, disability, or demise. Presently, the pension is calculated based on a salary cap of ₹15,000 which consequently restricts the contribution of the employer to the pension fund to 8.33% of this amount. Since the last revision of this salary limit in 2014, the employees and retirees contend that the pension scheme has lagged behind in adjusting to the changes in the earnings and inflation rates. Hence, the pensionable salary limit to be increased and the scheme to be modernized are some of the issues that are widely discussed among the people wanting financial security and better.
Proposed Increase of Salary Ceiling to ₹25,000
One of the key discussions around the EPS-95 premier is about raising the salary limit from the present ₹15,000 to ₹25,000 per month. If this discussion leads to an approval, the employer’s contribution per month will increase from ₹1,250 to ₹2,083—which is going to be a great boost to the pension accumulation over the years. This reform proposal is included in the larger EPFO reforms which aim to modernize the social security concept under the concept of “EPFO 3.0.” Not only will a higher ceiling earn a better pension, but it will also increase the enrolment of middle income tier employees into the pension scheme, particularly those who are now excluded because their salaries are over the ₹15,000 limit.
Minimum Pension Hike Debate and DA Demand
In tandem with the ceiling hike, some of the long-pending demands that the pensioners and unions have been raising include an increase in the minimum monthly pension, which has been unchanged at ₹1,000 since 2014. The pensioners and unions have been urging the government to increase this minimum to ₹7,500 per month with a similar Dearness Allowance (DA) component as in government pension schemes. These demands are a result of both the rising cost of living and the inadequacy of the current minimum pension amount.
Nonetheless, the replies in Parliament from the government reveal that there is no authorized strategy so far to either raise the minimum pension or start awarding DA. The most important obstacle is the actuarial deficit in the EPS fund, which indicates that the scheme at present does not have the financial power to handle higher payouts without the assistance of new funds.
What These Changes Mean for Employees and Pensioners
In case the salary ceiling is raised to ₹25,000, then employees who are in the salary range of ₹15,000 to ₹25,000 will get higher pensionable salaries, and hence their retirement benefits will get improved. It would also result in wider pension coverage and more organized labour claiming financial stability.
On the flip side, the increase in the minimum pension is still a question mark. Unless the government rectifies the fund deficit or provides additional financial support, pensioners will have to consider reports about the increase to ₹7,500 as mere speculation.
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