New Delhi: A Parliamentary panel Tuesday asked the government to peg the minimum pension at Rs 3,000 a month under the Employees Pension Scheme 1995 (EPS-95) run by retirement fund manager EPFO to help retired workers tide over rising prices.
"EPS is the only financial assurance to retired workers and their families, specially low and medium wage earners, and failure to strengthen the scheme has undone the very reason for instituting it," the Committee on Petitions said in its report, which was tabled in the Rajya Sabha today by its chairman Bhagat Singh Koshyari.
The committee suggested the government should increase its contribution to the scheme from the existing 1.16 percent of basic wages (basic pay + dearness allowance) to 8.33 percent to ensure a minimum monthly pension of Rs 3,000.
According to the committee, more than 30 lakh employees (pensioners under the scheme) get less than Rs 1,000 a month, of which more than 25 lakh get less than Rs 500 per month.
As of now, 55 million employees contribute 8.33 percent of their basic wages while the government contributes 1.16 percent toward EPS-95, making a "mockery" of the pension scheme.
The result of such a negligible government contribution is an injustice for the workers. Given the recent price rise, workers should be able to maintain their standard of living after superannuation, it added.
Noting that keeping the wage ceiling of Rs 6,500 for more than 10 years hurts pensioners, the committee recommended that it should be enhanced immediately as it would improve the pension amount significantly.
The committee was of the view that the government should play its role as the sponsor of the scheme.
While it is necessary for the government to urgently intervene in the matter of EPS-95, the problems cannot be solved in isolation unless a comprehensive review of the scheme is carried out.
The committee expressed similar views about the Employees Deposit Linked Scheme, under which nominees get an assured sum on the demise of workers during service.
The panel recommended that EPFO should adopt modern accounting methods conforming to standards prescribed by the Comptroller and Auditor General and Actuaries Institutes so that transparent accounting and fair actuarial valuations are practised.
Pensions should be linked to prices so that beneficiaries under EPS-95 don't feel the pressure of inflation, the committee said. It also recommended a separate grievance redressal mechanism for pensioners.
For delays in crediting the accounts of pensioners, compensation should be paid at a reasonable rate of interest.
The panel suggested exploring the possibility of unifying pension schemes, including the New Pension System and EPS-95, under a single administrative agency to avoid maintaining separate corpus funds and to reduce government expenditure.
First Published: Tuesday, September 03, 2013, 22:05