A parliamentary panel has asked the labour ministry to complete third-party evaluation of the Employee Pension Scheme (EPS) -- the first such exercise since its inception 30 years ago -- within a definite timeframe, preferably by the end of 2025, to make it more effective.
Headed by Bharatiya Janata Party MP Basavaraj S Bommai, the Parliamentary Standing Committee on Labour has also asked the ministry to consider 'with a sense of urgency' increasing the minimum pension of Rs 1,000 under EPS, given the 'manifold increase in the cost of living'.
The EPS, which came into force in November 1995, is administered by the Employees’ Provident Fund Organisation (EPFO).
The committee said the ministry had awarded the contract for conducting the maiden third-party evaluation of the EPS through the request for proposal (RFP) route, and the exercise was currently underway.
According to labour economist K R Shyam Sundar, a large number of subscribers under the EPS are low-paid workers, which severely limits their contribution towards pension during their working age.
“It is a welcome move that the scheme is being evaluated, as the stagnation in wages and an increase in inflation during a worker’s lifetime results in very little corpus and little pension afterwards. It’s important that this is done in a timely manner,” he said.
The committee report also noted: 'Considering the manifold increase in the cost of living in 2024 vis-à-vis 2014 and other relevant factors, there is a need to seriously consider an upward revision of this amount.
Notwithstanding the financial implications involved, the ministry/EPFO need to take up this significant task sympathetically with a sense of urgency.'
Currently, under the EPS 1995, the central government provides a grant-in-aid under the minimum pension scheme component (with effect from September 2014) towards reimbursement of the difference between the minimum pension of Rs 1,000 and the actual member pension, if the pension is lower than Rs 1,000.
The labour ministry apprised the committee that the proposal for increasing the minimum pension under EPS from Rs 1,000 to Rs 2,000 per month by providing additional budgetary support was not approved by the finance ministry in 2020, and that it was also part of the labour ministry’s pre-Budget proposal in FY25.
The total number of pensioners under the EPS stood at 7.85 million in 2023-2024. Of them, 3.66 million pensioners received the Rs 1,000 minimum pension during that financial year, with 2.06 million receiving government support to avail of this minimum monthly pension amount.
Shiva Rajora, Business Standard
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