Home / Money / Personal Finance /  Amid fund crunch, EPFO shelves plan to double minimum pension

NEW DELHI : After months of deliberation, the plan to double the minimum pension for the nearly 4.5 million pensioners of the Employees’ Provident Fund Organisation (EPFO) has been shelved.

An internal panel of the retirement fund manager had recommended increasing the pension for EPFO subscribers from the existing 1,000 per month to 2,000 per month. However, the Union labour and employment ministry has shelved the plan at least for the time being, three officials said, requesting anonymity.

“This is now on hold. We cannot go ahead as it will burden us financially," said one of the officials mentioned above. There are 6 million pensioners under the EPFO, of which nearly 4.5 million receive less than 2,000 per month. An increase in the pension is likely to put an additional annual burden of 1,500 crore on the government. The labour ministry, which controls EPFO, said there are two constraints—one financial and other the timing of the year. As it’s election time, it’s not possible to demand more funding, another official said.

EPFO does not have enough surplus to double the pension on its own and needs financial support to implement the scheme which will benefit pensioners getting less than 1,000. After announcing an 8.65% interest rate for its 60 million subscribers in February for 2018-19, the surplus with the retirement fund body will be around 150 crore.

“The model code of conduct came in March, but the EPFO had sought clarity from the government in January. There was no assurance from the government, whether or not they will provide the money," said the first official.

Following the suggestion of the internal empowered committee of the EPFO on doubling of pension, a cabinet note was prepared, said the first official. “As the cabinet note was prepared for action based on the recommendations, the report was not made public," he added.

The government has assured a minimum pension of 3,000 per month for informal sector workers through the Pradhan Mantri Shram Yogi Maandhan (PMSYM) scheme, which was announced in the interim budget. This aims to benefit workers in the 18-40 age group, who need to contribute between 55 and 2,000 per month.

As such, it is natural for formal sector pensioners, who contributed to the pension kitty of the EPFO, to get more pension.

In the last central board meeting of the EPFO it was indicated that a fresh meeting will be called to announce the pension hike. However, this is not likely to happen anytime soon.

A labour ministry spokesperson person refused to comment on the development.

“Now it looks difficult. There is no intimation about any fresh central board of trustees (CBT) meeting taking place now," said Virjesh Upadhyay, a central board member of the EPFO and secretary general of the Bharatiya Mazdoor Sangh. “Once the elections are over and a new government is in place, the CBT may convene to take call on key issues."

A.R. Sindhu, a secretary with the Centre of Indian Trade Unions, said if the government can take a call on several populist measures, including cash benefits ahead of the elections, why could it not hike the pension of EPFO subscribers. A joint trade union charter has said that the pension payment must go up as it will benefit millions.

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