NEW DELHI: In a bid to assess effectiveness, sustainability, and scope for further improvement in the Centre’s flagship pension scheme for the formal sector — Employees’ Pension Scheme (EPS) — the parliamentary standing committee on labour has asked the labour ministry to complete the maiden third-party evaluation of the scheme by the end of 2025.
“Observing that the third-party evaluation of the scheme is being conducted after 30 years of its introduction, the committee strongly recommends that the exercise be completed within a definite time frame, preferably by the end of the year 2025,” the committee noted in its latest report submitted to Parliament.
The EPS, which came into effect in November 1995, is administered by the Employees’ Provident Fund Organisation (EPFO).
The committee noted that the ministry has awarded the contract for conducting the maiden third-party evaluation of the EPS-95 scheme through the request for proposal (RFP) route and the exercise is currently underway.
“In so far as conducting such evaluation in the past is concerned, as per available information, no such evaluation was conducted earlier,” ministry representatives informed the House panel.
Labour economist KR Shyam Sundar says that a large number of subscribers under the EPS are lowly paid workers, thus severely limiting their contributions towards their pension during their working age.
“It is a welcome move that the scheme is being evaluated, as the stagnation in wages and an increase in inflation during a worker’s lifetime result in very little corpus and little pension afterwards. It’s important that this is done in a timely manner,” he added.
Besides, the committee also asked the labour ministry to take up the issue of increasing the minimum pension amount from Rs 1,000 at present “with a sense of urgency” in the larger interest of the affected pensioners and their family members.
“Considering the manifold increase in the cost of living in 2024 vis-à-vis 2014 and other relevant factors, there is a need to seriously look into the aspect of considering an upward revision of this amount. Notwithstanding the financial implications involved, the ministry/EPFO need to take up this significant task sympathetically and with a sense of urgency,” the report noted.
Currently, under the EPS 1995, a grant-in-aid is provided by the central government (with effect from September 2014) under the minimum pension scheme component towards reimbursement of the difference in amount between the minimum pension of Rs 1,000 and the actual member pension under this if the pension is less than Rs 1,000.
The labour ministry apprised the House panel that the proposal for increasing the minimum pension under EPS from Rs 1,000 to Rs 2,000 per month by providing additional budgetary support was not approved by the finance ministry in 2020. It was also a part of the labour ministry’s pre-Budget proposal in FY25.
Latest data show that the total number of pensioners under the EPS stood at 7.85 million in FY24. Of this, a total of 3.66 million pensioners received the Rs 1,000 minimum pension during the financial year, with 2.06 million people receiving government support to avail of this minimum monthly pension amount.
Source: Business Standard
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