Perks of the trade: India may double or triple minimum monthly pension

• The Union government is likely to double or even triple the minimum monthly pension of retired organised sector employees.
  
• The recommendation for the same was made by a three-member committee constituted by the labour ministry.
  
• The central board of EPFO, and the committee are expected to deliberate upon the way to go about the committee’s recommendation on Monday and Tuesday.

Pensioners now have one more thing to be happy about besides not having to work through this terrible summer. The Union government is likely to double or even triple the minimum monthly pension of retired organised sector employees. The recommendation for the same was made by a three-member committee constituted by the labour ministry, three months ago.

As per the committee, the existing minimum pension of ₹1,000 per month should be immediately raised to ₹2,000 and further deliberations should be made on the possibility of increasing it upto ₹5,000.

A ₹1,000 pension per month means as little as ₹33 per day which, considering the high cost of living, is insufficient even for a rural pensioner. The Union Cabinet had approved ₹1,000 as the minimum pension in 2014 and had later extended it upto 2015. From then onwards, it has never been revised.

The issues of pension are undertaken by Employees' Provident Fund Organisation (EPFO) that is the institution that manages social security funds of workers in the (semi) organised sector in India. All establishments across the country that are ‘organised’ or have 20 or more employees whose basic wages are up to ₹15,000 are covered under the social security schemes run by this institution.

Each month, an organised sector employee contributes 12% of his basic salary to EPFO as provident deduction, and the same amount is contributed by the employer. From the employer’s contribution, 8.33% goes to employees’ pension scheme and the rest to the provident fund.

The central board of EPFO and the committee are expected to deliberate on the way to go about with the committee’s recommendation over Monday and Tuesday. Though the decision is not final yet, the committee is strongly in favour of it.

Ravi Wig, who is also a central board member of the EPFO, is hopeful that the labour ministry will stand in their favour since the previous additional secretary heading the committee has been promoted as the position of a secretary in the labour and employment ministry.

Of the six million pensioners that fall under the Employee’s Pension Scheme (1995), about four million get less than ₹1,500 per month while the government boasts of three trillion in its pension funds. Considering these figures, if the minimum pension is even doubled, it would help lakhs of pensioners, but it will also add ₹30 billion to the government budget, annually.