The Union Finance Ministry has turned down a request from the labour ministry to increase the monthly minimum pension in the Employee Pension Scheme (EPS), Business Standard reported. This decision was communicated to the Central Board of Trustees (CBT) during a meeting on Saturday.
According to sources quoted by the Business Daily, a proposal to raise the minimum pension under EPS from ₹1,000 to ₹2,000 per month was sent to the Ministry of Finance based on recommendations from a government-appointed monitoring committee. However, the Ministry of Finance declined to approve the proposal.
Minimum Pension Under EPS, 1995
Since September 1, 2014, the Government has been providing a minimum pension of ₹1000 per month to pensioners under the Employees’ Pension Scheme (EPS), 1995.
The EPS, 1995 operates as a 'Defined Contribution-Defined Benefit' Social Security Scheme. The Employees’ Pension Fund is funded by contributions from employers at 8.33% of wages and contributions from the Central Government, capped at 1.16% of wages up to ₹15,000 per month. All scheme benefits are financed from these accumulations.
According to the Employees’ Provident Fund Organisation's (EPFO) annual report for FY23, there are a total of 7.55 million pensioners. Of these, 3.64 million receive pensions up to ₹1,000 per month, followed by 1.17 million who receive pensions ranging between ₹1,001 and ₹1,500. Additionally, around 868,000 pensioners receive pensions between ₹1,501 and ₹2,000 per month. Moreover, only 26,769 pensioners receive amounts exceeding ₹5,000 per month, Business Standard reported.
In March 2022, the Parliamentary Standing Committee on Labour directed the labor ministry to collaborate with the finance ministry to ensure adequate budgetary support, highlighting the insufficiency of the current ₹1,000 monthly pension.
The interest rate on employee provident fund was raised to 8.25% for the fiscal year ending March 31, marking the highest rate in three years.
The labor ministry announced that the central board of trustees of EPFO proposed to the finance ministry to increase the interest rate for nearly 8 crore contributing subscribers.
As per the labor ministry statement, this decision was made during the 235th meeting of the Central Board of Trustees (CBT) of EPFO on Saturday, chaired by Union Labour & Employment Minister Bhupender Yadav.
"The CBT recommended an annual interest rate of 8.25% to be credited on EPF accumulations in members' accounts for 2023-24. After approval by the Ministry of Finance, this interest rate will be officially notified in the government gazette. Subsequently, EPFO will credit the approved rate of interest into its subscribers' accounts," it stated.
This marks the highest interest rate for EPF subscribers in the last three years. The previous peak was in 2019-20 when 8.5% interest was paid. It remained at the same level in 2020-21 but dropped to 8.1% the following year, the lowest in four decades.
The interest rate was marginally increased to 8.15% in 2022-23 (April 2022 to March 2023).
The recommendation for the 2023-24 fiscal year will now be forwarded to the finance ministry. Once approved, EPFO will credit the new interest rate to the EPF subscribers.
First Published:
12 Feb 2024, 01:27 PM IST
FAQs
In September 2014, the government gave effect to a long-awaited demand of workers' unions for the implementation of a minimum pension under the Employees Provident Fund Organisation (EPFO), thus providing a minimum pension of Rs 1,000 per month for members, Rs 750 per month for orphan pensioners, and Rs 250 per month ...
How much pension will I get from EPS? ›
In this way, the maximum pension can be taken from EPS up to Rs 7,500 and the minimum pension up to Rs 1,000. You can also calculate your pension amount through this formula. An employer contributes 3.67 per cent of the employee's salary towards the EPF and 8.33 per cent towards the EPS.
What happens to EPS after EPF withdrawal? ›
Once the withdrawal amount is approved by the EPFO, the accumulated EPF or EPS amount shall be deposited in the respective bank account and an SMS for the confirmation of the same shall be sent to the registered mobile number of the individual.
What is the meaning of EPS in Epfo? ›
What is the EPS? The Employee Pension Scheme (EPS) is a scheme offered by the Employee Provident Fund Organization (EPFO) that provides pensions to eligible employees. The scheme is available to employees earning salaries up to Rs. 15,000 and is designed to offer financial security during their retirement years.
How is the minimum pension calculated? ›
The minimum annual payment amount is worked out by multiplying the member's pension account balance by a percentage factor. The amount is rounded to the nearest 10 whole dollars. If the amount ends in an exact five dollars, it is rounded up to the next 10 whole dollars.
What is the minimum pension? ›
Workplace pension contributions
| The minimum your employer pays | Total minimum contribution |
|---|
| From April 2019 | 3% | 8% |
11 years or more but less than 20 years. Half of emoluments for every competed 6 monthly period of qualifying service subject to a maximum of 33 times of emoluments. A retiring Government servant will be entitled to receive service gratuity (and not pension) if total qualifying services less than 10 years.
How to check EPS amount? ›
Visit EPFO Website: Go to the official Employee Provident Fund Organisation (EPFO) website. Login: Log in using your UAN (Universal Account Number) and password. Access Passbook: Find and click on the 'Member Passbook' or 'Pension Passbook' option. View Balance: Your EPS balance will be displayed here.
Can we withdraw pension amount from EPFO? ›
The rate of pension decreases by 4% every year till you reach the age of 50. You can withdraw your pension contribution without any hitch when you have served for less than ten years but more than six months. However, you can withdraw it after being unemployed for approximately two months.
Can I withdraw my 100% PF amount? ›
Complete Withdrawal
EPF can be withdrawn under these circ*mstances: When an employee retires. If an individual is unemployed for more than a month, then he/she can withdraw 75% of fund. If an individual is unemployed for more than 2 months, then he/she can withdraw 100% of fund.
Irrespective of the last drawn salary, the maximum salary considered for this calculation is Rs 15,000. Therefore, if your last drawn salary is Rs 42,000 and you have worked for eight consecutive years, the EPS amount you can withdraw is Rs 15,000 * 8.22 = Rs 1,23,300.
Who is not eligible for withdrawal benefit EPS? ›
Withdrawal Benefit: An applicant who has been in service less than 9.5 years and is not 50 years old is eligible to apply for this certificate. As the employees are not yet eligible for pensions, the scheme allows them to get back their money.
How to remove EPS from EPFO? ›
The following list of documents has to be submitted to your EPFO regional office to withdraw your pension corpus.
- A duly filled Form 10C if you haven't completed 10 years of service.
- A duly filled Form 10D if you've reached 50 or 58 years of age.
- A copy of your proof of identity.
- A copy of your proof of address.
Yes, EPS is mandatory for all employees who are part of the Employees' Provident Fund (EPF) scheme and earn a monthly salary of up to ₹15,000. It provides pension benefits after retirement.
What is EPS payout? ›
Earnings per share (EPS) is a measure of a company's profitability that indicates how much profit each outstanding share of common stock has earned. It's calculated by dividing the company's net income by the total number of outstanding shares.
What is a pensionable salary? ›
Basic pay is the most common method of calculation for defined contribution pensions. With this method, pensionable earnings = the employee's basic salary before any bonuses, overtime, or commission.
How to withdraw pension contribution in EPF? ›
How to withdraw your pension contribution? According to the Employee Provident Fund Act of 1952, an EPFO member can withdraw their PF amount and claim the EPS amount after retirement. To withdraw your pension, you are required to submit the necessary forms including Form 10C and Form 10D.
