Parliamentary Standing Committee on Labour has urged the Ministry of Labour and Employment to increase the minimum pension under the Employees’ Pension Scheme (EPS) and complete a comprehensive evaluation of the scheme by the end of 2025.
The EPS was introduced in 1995 and is managed by the Employees’ Provident Fund Organisation (EPFO).
It has served as a cornerstone of social security for workers in the formal sector.
However, concerns over its adequacy and sustainability have prompted calls for reform.
Current State of EPS and Recommendations by the Panel
EPS currently guarantees a minimum pension of ₹1,000 per month, a figure that has remained unchanged since 2014.
People widely regard this amount as insufficient due to the rising cost of living and inflation over the years.
Trade unions and pensioners’ associations have consistently pushed for a significant increase in the minimum pension.
They have demanded that it be raised to at least ₹7,500 per month.
The scheme receives funding through contributions from employers, employees, and the central government.
The government provides a grant-in-aid to bridge the gap between the minimum pension and the actual member pension.
The Parliamentary Standing Committee has made several key recommendations to address the shortcomings of the EPS:
- Increase in Minimum Pension: The panel has emphasized the urgent need to revise the minimum pension amount, considering the manifold increase in the cost of living since 2014. It has called on the Ministry and EPFO to approach this task with a sense of urgency and compassion.
- Comprehensive Evaluation: For the first time in 30 years, the EPS will undergo a third-party evaluation to assess its effectiveness, sustainability, and scope for improvement. The committee has strongly recommended completing this evaluation within a definitive timeframe, preferably by the end of 2025.
- Stakeholder Engagement: The panel emphasized the importance of gathering feedback from various stakeholders, such as trade unions, pensioners, and labour economists. This approach aims to ensure that the revised scheme effectively addresses the needs of its beneficiaries.
Expert Opinions, Challenges and Financial Implications
Labour economist K.R. Shyam Sundar welcomed the move, stating, “A large number of subscribers under the EPS are lowly paid workers, which severely limits their contributions towards their pension during their working age.”
Shyam added, “The evaluation is a welcome step, as it will address issues like stagnation in wages and inflation, which result in inadequate pensions.”
While the recommendations have been widely praised, they also pose significant financial challenges.
Increasing the minimum pension to ₹7,500 per month would require substantial additional funding, raising questions about the scheme’s long-term sustainability.
The central government and EPFO must explore innovative funding mechanisms to address the financial implications.
These efforts should ensure that the welfare of pensioners remains a priority.
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