EPFO approves Rs 1,000 minimum monthly pension
New Delhi: Trustees of retirement fund body EPFO Thursday approved a proposal to provide a monthly pension of minimum Rs 1,000, a decision that will immediately benefit about its 28 lakh pensioners.
The Central Board of Trustees (CBT), the apex decision making body of EPFO also decided to raise the monthly wage ceiling to Rs 15,000 from Rs 6,500 by amending the EPF scheme, 1952, so that more workers can be brought under its various social security programmes.
"The board has decided to approve the proposed amendments in the schemes to ensure that Rs 1,000 minimum monthly pension under EPS-95 and also increased the wage ceiling to Rs 15,000 per month," Labour Minister Oscar Fernandes, who chaired the CBT meeting, told reporters here.
At present, workers getting basic wages, including basic pay and DA, of up to Rs 6,500 are covered under the ambit of Employees' Provident Fund Organisation (EPFO).
According an EPFO official, the Labour Ministry will soon move proposal before the Union Cabinet for its approval for the Rs 1,000 minimum monthly pension as the government would have to make fund provisions for the purpose.
"We have also reduced the administrative charges paid by the employers. Their burden would increase with the increase in wage ceiling," the Minister said.
The board has also decided to reduce administrative charges from 1.10 percent of the basic wage, including basic pay and dearness allowance, to 0.85 percent.
Besides, the trustees have also approved a proposed change in the methodology of computing the pensionable salary.
The pensionable salary will be calculated on the basis of average salary of the last 60 months instead of 12 months as provided in the EPS-95.
However, the proposed change in the methodology for computing pensionable salary was approved with a dissent note from the trade unionist members of the CBT.
The Employee Provident Fund Organisation (EPFO) runs social security programmes Employees' Provident Fund Scheme 1952, Employees' Pension Scheme 1995 and Employees' Deposit Linked Insurance Scheme 1976.
"Unionists have opposed the proposed amendment to the methodology for computing pensionable salary. I have suggested use of average salary of 24 months for the purpose," D L Sachdev, a trustee, who is the All-India Trade Union Secretary, told PTI.
He said unionists also expressed reservations about the Finance Ministry suggestions to withdraw two year bonus under the EPS-95 provided to subscribers who render 20 years of pensionable service.
However, the CBT did not take any decision regarding bonus under Employee Pension Scheme, 1995 (EPS-95). The trustee also deferred a decision on the proposal to increase retirement age under the scheme to 60 years from 58 years.
At present, under EPS-95, the EPFO subscribers cease to be a member of EPS-95 after attaining the age of 58 years and can apply for fixation of his/her pension thereafter.
However, there is no age bar for contributing to the EPF and EDLI schemes run by the EPFO.
The government would have to provide an additional amount of Rs 1,217 crore to ensure the minimum pension of Rs 1,000 starting 2014-15. Pensioners are, therefore, expected to get benefit with effect from April 1 this year. The proposal has already been approved by the Finance Ministry.
The move to ensure Rs 1,000 minimum pension under EPS-95 will immediately benefit about 28 lakh pensioners including five lakh widows. There are about 44 lakh pensioners.
The decisions regarding wage ceiling, reduction in administrative charges for employers and change in the methodology for computing pensionable salary can be notified and implemented by the Labour Ministry.
The proposal for raising wage ceiling to Rs 15,000 is expected to bring in 50 lakh more workers under the ambit of schemes run by EPFO.
The minister also launched a software to monitor the compliance by the employers under the social security schemes run by the EPFO.