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Wednesday, May 13, 2015

Measures for pension beneficiaries under EPF

Measures for pension beneficiaries under EPF

GOVERNMENT OF INDIA
MINISTRY OF  LABOUR AND EMPLOYMENT
RAJYA SABHA

UNSTARRED QUESTION NO-1966
ANSWERED ON-13.05.2015

Measures for pension beneficiaries under EPF

1966 . Dr. Satyanarayan Jatiya

Will the Minister of LABOUR AND EMPLOYMENT be pleased to state the measures taken by Government to meet the demands of pension beneficiaries under the Employees'' Provident Fund Pension Scheme, 1995 for increasing minimum pension to a respectable level of Rs. 3000 for better standard of living and provision for Dearness Allowance as per price index and fixation of pension on the basis of total length of service?


ANSWER

MINISTER OF STATE (IC) FOR LABOUR AND EMPLOYMENT
(SHRI BANDARU DATTATREYA)

As per the provisions contained in the Employees’ Pension Scheme (EPS), 1995, pension to employees who joined on or after 16.11.1995 is calculated on the basis of pensionable service and pensionable salary. EPS, 1995 is a largely self-funded scheme with combined features of “Defined Benefit” and “Defined Contribution.” Accordingly, the Scheme describes the rate of contribution payable as well as the scale of benefits admissible. Para 32 of the EPS, 1995 provides for annual valuation of Employees’ Pension Fund by a Valuer appointed by the Central Government. Based on the results of such valuations and health of Employees’ Pension Fund and to ensure the sustainability and viability of EPS, 1995, actuarial impact on the Scheme due to any increase in benefit is required to be kept in view. Therefore, providing a minimum pension of Rs. 3,000/- to lakhs of existing pensioners and crores of prospective pensioners has very huge financial implications and could jeopardize the existence of the Pension Fund itself. 

However, Government vide notification No. GSR 593 (E) dated 19.08.2014 implemented the provision of minimum pension of Rs.1,000/- per month with effect from 01.09.2014 for the financial year 2014-15 by providing budgetary support keeping in view the interest of the most vulnerable sections. The Union Cabinet in its meeting held on 29.04.2015 has approved the continuation of minimum pension of Rs. 1,000/- per month in perpetuity under EPS, 1995 beyond 2014-15 with certain conditionalities. 

Further, index-linking of pension, i.e., increase in pension to fully neutralize inflation was considered by the Expert Committee constituted by the Government to review EPS, 1995, and the same was found not feasible through a funded scheme like EPS, 1995 wherein the contribution of employer and Government is at a fixed rate of 8.33 per cent and 1.16 per cent. 

Source: http://rajyasabha.nic.in/

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