As per reports, the Narendra Modi led government is mulling to double or treble the minimum monthly pension of the retired employees of the organized sector in the country. The move, if implemented, could benefit lakhs of pensioners while costing the government a sizable additional expense.
Three months ago, a three-member committee, constituted by the labour ministry, had concluded that the existing pension of 1000 rupees was too low, and needed to be increased. Though the final decision is still pending one of the members of the labour ministry-constituted committee on pension, Ravi Wig stated, “We have discussed that the minimum pension should be between Rs. 2,000 to 5,000 instead of the present Rs. 1,000.”
“The committee has suggested that the government should immediately announce Rs. 2,000 as the minimum pension. The further enhancement up to Rs. 5,000 can be debated and arrived at over time. The government has a responsibility and, I think, the poor workers should be provided with an enhanced pension,” said Wig, who is also a central board member of the Employees Provident Fund Organisation.
Ravi Wig further went on to explain that the current pension if divided comes to approximately 33 rupees a day, which is not even sufficient to procure two square meals a day, even for a pensioner living in a rural area, leave alone the ones stating in urban areas, where things are much more expensive. He said the previous additional secretary of the labour ministry heading the committee has been promoted as the secretary, labour, and employment, and he is hopeful that the ministry will take a view on the issue sooner or later.
While a labour ministry spokesperson said he was not aware of any detail of the development, Prabhakar Banasura, a central board member of the EPFO, said that he is expecting a detailed discussion on pension during the subsequent meetings this week.
Employees provident fund organization has an active member base of over 6 crores(with an at least one-month contribution during the year). Every month, an organized sector employee contributes 12% of his basic salary and HRA to EPFO as a provident deduction, and a similar amount is contributed by the employer. From the employer’s 12% contribution, 8.33% goes to employees’ pension scheme and the rest to the provident fund. As of now, EPF contribution is mandatory for employees earning a monthly salary of up to 15,000 in companies and establishments with 20 or more workers on its payroll.
In an attempt to encourage institutions to create jobs, the BJP government in the budget announced for the fiscal year 2019, had announced that the government will pay the employer’s contribution of 12% of basic salary towards the retirement corpus of individuals in the Employees’ Provident Fund (EPF) in the first three years of employment.
The new Union budget 2018 has also proposed to amend the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 to reduce women employees’ contribution to the EPF to 8% for first three years of their employment, from 12%. The employers’ contribution will, however, remain at the existing 12%.