Economy News

Finance Ministry seeks aid from labor ministry on proposed fund hike on minimal EPS pension

Finance Ministry seeks aid from labor ministry on proposed fund hike on minimal EPS pension

Guaranteed pension amounting to Rs 3,000 per month has been announced for nearly 100 million unorganized workers, therefore, the Finance ministry has requested the labor ministry to take a look over it and if it can fund the proposed hike in the minimum pension within the Employee Pension Scheme [EPS] for its customers from its fund rather than asking the Centre for funds.

The enormous pressure is built upon the government to increase the EPS minimum pension of its customers along with guaranteed pension scheme for the unorganized workers due to which the move comes in the wake of the new measures.

High powered panel on pension had suggested the government that they should increase the minimum pension of Rs.1,000 to Rs.2,000. This bold step might have benefited 4 million customers although it could cost the exchequer over Rs 3,000 crore and above Rs 9,000 crore crossing the annual outgo.

The Finance Ministry wrote a letter to the Employees Provident Fund Organization [EPFO] to understand what measures have been taken to reduce the deficit and if they could fund to hike the minimum proposed pension scheme, the senior government official informed to ET requesting not be mention his name.

While the Pension Kitty cannot fund the increased pension amount and they will inform about it to the Finance Ministry as early as possible, the official stated, further said that this is a complete waste of time on our part and has further delayed the process. Meanwhile, we are hopeful that be implemented before the elections, the government official informed.

ET had mentioned in recent times that the suggestions of the committee had been mailed to the Finance Ministry for reflection purpose. After which the Finance Ministry has written back to the labor ministry asking if it could support the scheme by funding.

Earlier the high powered panel had suggested that the minimum monthly pension scheme should be increased to at-least Rs.2,000 every month, on condition that the central government budgetary will support for providing the same annually. Addition to this, it might be considered together with variation in the scheme eventually refusing the pre-mature withdrawal benefits and secure the monthly minimum contribution, which it had additionally proposed.

On Wednesday, the sub-committee will be placed with the recommendations of the high powered committee, after which it will be tabled before the trustees of the central board of EPFO during its next meeting with the board members which is scheduled to take place on February 21.

Subject to the Employees’ Pension Scheme [EPS] of 1995, since 2014 the minimum pension of Rs. 1,000 is granted for the pensioners. Although the beneficiaries entitled to the minimum pension scheme need not need to donate to this kitty pension. The enrollment of the employees will be done automatically within the EPS scheme only if they are the members of the Employees’ Provident Fund Scheme. Almost 12 percent of the employees’ salary of each month is transferred into the EPF account, and 12 percent of the employer’s contribution is divided as follows 3.67 percent for EPF, 0.5 percent for EDLI and 8.33 percent for EPS and the remaining is for the administrative expenditure. The central government also contributes 1.16 percent, the basic salary of the employees’ along with daily allowance.

All India EPS 95 Pensioners Snagharsh Samiti and the trade unions rigorously demanding from a long time to increase the minimum monthly pension amount from Rs 3,000 to Rs 7500 every month. The latest announcement related to the pension guarantee scheme of Rs 3,000 to around 100 million unorganized workers has further invoked the pressures on the EPFO to raise the minimum pension amount and to ensure that the scheme stays relevant.

Last year the parliamentary committee had asked the government estimate EPS 1995 and to do consider on the revision about the minimum monthly pension amounting to Rs 1,000 stating that the benefit of the social security was too small to meet the basic needs.

The committee advised the government to commit themselves over the pension scheme by particularly referring to the rights of the pensioners and depending upon the outcome consider modifying the amount as per needed.

About author

Janet Ritchie started her career as a freelance news writer for some foremost digital publications. She joined FinanceBottom and here she covers range of beats including personal financing, government financing, regulations, taxes, banking and much more. During her free time, she enjoys travelling.
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