EPS 95 setback: Government cites EPS fund deficit; will the minimum Rs 1,000 pension stay unchanged?
Minister of State for Labour and Employment Shobha Karandlaje said the valuation of the EPS fund as on 31 March 2019 showed a deficit, signalling limited scope for enhancing benefits under the scheme, according to an ET report.The clarification came in response to an unstarred question from Balya Mama Suresh Gopinath Mhatre, who asked if the government plans to raise the minimum EPS-95 pension from Rs 1,000 to Rs 7,500 per month.Why the pension hike is unlikelyExplaining the scheme’s structure, the minister noted that EPS-95 is a “defined contribution-defined benefit” arrangement.
“The corpus of the Employees’ Pension Fund is made up of (i) contribution by the employer @ 8.33 per cent of wages; and (ii) contribution from Central Government through budgetary support @ 1.16 per cent of wages up to an amount of Rs 15,000/- per month,” Karandlaje said, ET quoted.She added that all benefits are paid from these accumulations and that the fund is valued annually under Paragraph 32 of EPS, 1995.
“As per the valuation of the fund as on 31.03.2019, there is an actuarial deficit,” she said.Mhatre also highlighted several long-standing concerns of EPS-95 pensioners, including the absence of Dearness Allowance, the inadequacy of the existing pension amount, and the government’s response to representations made by pensioners’ organisations.Responding, the minister said, “The government is providing a minimum pension of Rs 1,000 per month to the pensioners under the EPS, 1995, by providing budgetary support, which is in addition to the budgetary support of 1.16 per cent of wages provided annually towards EPS to Employees’ Provident Fund Organisation (EPFO).”Her reply highlighted that the scheme’s financial strain has required continuous central support.
Karandlaje further said, “The Government of India is committed to ensuring maximum benefits for workers under the EPS-95 scheme, duly taking into consideration the health of the respective funds as well as the future liabilities thereon.”The minister’s statements indicate that given the current deficits and ongoing funding pressures, an upward revision of the minimum pension appears unlikely in the near term.What EPS-95 currently offersEPS-95 provides social security benefits to members and their families across multiple life events.
These include:
- Pension on superannuation at 58 years
- Early pension from 50 years
- Disability pension during service
- Widow/widower pension on the member’s death
- Children’s pension for two children up to 25 years
- Orphan pension for two orphans up to 25 years if no spouse is alive
- Life-long disabled child/orphan pension
- Nominee pension when there is no family
- Pension for dependent parents in absence of family or nominee
- Withdrawal benefit for members not eligible for pension
EPS subscribers have long sought an increase in both the minimum and maximum pension limits, but the latest parliamentary reply suggests their demands will remain unresolved for now.
