EPFO may fix minimum pension for members at Rs 1,000 per month

Retirement fund body EPFO is mulling over fixation of the minimum pension for its subscribers at Rs 1,000 per month and the issue will be discussed by its trustees at their next meeting on December 23.

“The EPFO’s apex decision-making body, the Central Board of Trustees headed by the Labour Minister, will take call on the proposal to fix minimum pension at Rs 1,000 per month for its subscribers in a meeting on December 23,” a source privy to the development said.

According to EPFO data, as of March 31, 2010, there are 35 lakh pensioners subscribed to the retirement fund body, of which 14 lakh persons get a monthly pension of less than Rs 500.

The number of EPFO pensioners getting a monthly pension of Rs 1,000 is 7 lakh. The data reveals that there are cases where pensioners are getting a monthly pension as low as Rs 12 and Rs 38.

“In the present scenario, when the cost of living has gone up due to high inflation, the minimum pension should not be less than Rs 2,000 per month,” suggested Hind Mazdoor Sabha Secretary A D Nagpal.

He pointed out, “Even the senior citizen pension ranges from Rs 400 to Rs 1,000 per month across the states without any contribution.”

Although the representatives of employers and employees have agreed on fixing the minimum pension at Rs 1,000 per month, there is no decision on the means of raising the additional fund requirement.

As per estimates, the decision will require an additional contribution of 0.63 per cent of subscribers’ basic pay and dearness allowance.

The hike in contribution will be over-and-above the 8.33 per cent contributed by employers toward the pension account of employees, as well as the 1.16 per cent provided by the government under the scheme.

If the government decides to bear the extra cost, then an amendment to the Employees’ Pension Scheme (EPS) would be needed.

“It is possible trustees may decided on sharing of additional burden equally by government, employees and employers,” a trustee said.

Furthermore, the CBT is likely to discuss the proposal to issue pass books to subscribers on the lines of banking services for certain categories of workers, particularly construction labourers.

The EPFO has subscriber base of over 4.71 crore and manages a corpus of Rs 3.5 lakh crore.