The central government is reportedly considering an increase in the minimum pension under the Employees’ Pension Scheme (EPS) from the current ₹1,000 to ₹3,000 per month.
This move, which has been long overdue, aims to provide better financial security to pensioners in the organized sector.
The government could implement the revised pension amount in the coming months, once it receives final approval.
Background of the Employees’ Pension Scheme (EPS)
The Employees’ Pension Scheme (EPS) is a retirement plan managed by the Employees’ Provident Fund Organisation (EPFO).
It ensures a steady income for employees in the organized sector after retirement.
Employers allocate a portion of their contribution to the Employees’ Provident Fund (EPF) to fund the scheme.
Of the employer’s 12% contribution, 8.33% is allocated to EPS, while the remaining 3.67% goes to EPF.
Efforts to increase the minimum pension have been ongoing for several years.
In 2020, the Labour Ministry proposed increasing the pension to ₹2,000 per month with additional budgetary support.
However, the Finance Ministry did not approve the proposal.
During pre-Budget discussions in 2025, a delegation of EPS retirees met Finance Minister Nirmala Sitharaman to request an increase to ₹7,500 per month.
However, no formal assurance was given regarding their request.
Financial Implications and Government Considerations
The total corpus of EPS currently stands at ₹8 lakh crore, covering approximately 7.85 million pensioners.
Of these, 3.66 million pensioners receive the minimum pension of ₹1,000 per month.
The Labour Ministry is currently analyzing the additional expenses required to implement the pension hike.
In FY24, the government spent ₹1,223 crore on minimum pension payments, marking a 26% increase from ₹970 crore in FY23.
Earlier this month, a Parliamentary panel led by BJP MP Basavaraj Bommai urged the Labour Ministry to address the pension increase with urgency.
The panel highlighted the rising cost of living as a critical factor driving this recommendation.
Inflation, as measured by the Consumer Price Index (CPI), has risen by 72% over the past 11 years.
This sharp increase has made the current pension amount insufficient for retirees.
Expert Opinions on EPS Pension Hike
Economic experts and industry analysts have welcomed the potential increase.
Akhil Chandna, Partner at Grant Thornton Bharat, stated that the move would provide critical financial support to low-income retirees and their dependent family members.
Sandeep Vempati, economist at BJP, highlighted that pension indexing to inflation is a standard practice recommended by the International Labour Organisation (ILO).
However, he noted that global economic uncertainties could influence the final decision.
Note: We are also on WhatsApp, LinkedIn, Google News, and YouTube, to get the latest news updates, Subscribe to our Channels. WhatsApp– Click Here, Google News– Click Here, YouTube – Click Here, and LinkedIn– Click Here.
