This Diwali, private sector employees may have some good news. It’s expected that the Employees’ Provident Fund Organization (EPFO) may increase the minimum pension amount under the Employee Pension Scheme.
The EPFO’s Central Board of Trustees is scheduled to meet in Bengaluru on October 10th and 11th. This meeting is expected to take an important decision regarding increasing employees’ pensions. Currently, employees are awaiting an official announcement from the EPFO.
What is the current pension amount?
Employees say the minimum pension amount set under the Employee Pension Scheme (EPS) is too low. In 2014, the pension amount under this scheme was set at ₹1,000 per month, a demand employees have been demanding for an increase for a long time. According to media reports, a recent meeting proposed increasing the amount from ₹1,000 to ₹2,500 per month. If implemented, this decision would provide significant relief to employees and fulfill a long-standing demand.
Why the demand for increasing pension?
Employees believe that the current ₹1,000 pension amount is woefully inadequate given rising inflation. Trade unions and pensioner organizations have long demanded an increase to ₹7,500 per month. However, reports indicate that the Central Board of Trustees (CBT) has not yet accepted the proposal for a 7.5-fold direct pension increase.
How is EPFO pension decided?
Pension under the EPS scheme is calculated using a fixed formula: Pension = (Pensionable Salary × Pensionable Service) ÷ 70. Here, pensionable salary refers to the employee’s average salary over the last 60 months, while pensionable service refers to the number of years the employee has contributed to EPS. The maximum salary limit under this scheme is ₹15,000 per month. Furthermore, a minimum of 10 years of service is required to qualify for pension benefits.
Summary
Private sector employees may receive some good news this Diwali. The EPFO (Employees’ Provident Fund Organization) is considering increasing the minimum pension amount under the Employee Pension Scheme. Currently, it is ₹1,000 per month, and is expected to be raised to ₹2,500. If implemented, this decision would provide financial relief to millions of employees and fulfill a long-standing demand.