EPFO may amend pension scheme

While contributions by existing members has dwindled, the number of pensioners has increased, and with demands to increase the minimum monthly pension, the very feasibility of the social security scheme is being looked at closely.

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The Ministry of Labour and the Employees’ Provident Fund Organisation (EPFO) are planning to re-examine the Employee Pension Scheme (EPS) so that it becomes more feasible. The aim is to be able to work out ways to raise resources to be able to fund higher pensions every month.

In November, a Supreme Court ruling had allowed most categories of employees to opt for higher pension, excluding those who retired prior to 1 September, 2014, without exercising their option for higher/ uncapped pension under 11(3); and those who joined on or after 1 September, 2014, with salary exceeding the limit of Rs 15,000 per month.

The EPFO had issued a circular in December, 2022 offering a chance to only those members who have retired prior to September 1, 2014, to apply for higher EPS pension, provided they had applied for the same before they retired and had their application rejected.

A follow-up circular is now expected / awaited from EPFO indicating that the higher pension option is applicable to other categories of employees/ pensioners, too, in compliance with the Supreme Court Order of November, 2022.

The Supreme Court’s November ruling regarding higher pension has naturally increased the financial pressure on the EPFO’s pension payouts. Therefore, it is now being forced to closely examine exactly how much the liability will increase.

The matter will be discussed in detail in February at the meeting of the Central Board of Trustees of the EPFO.

It is a cause of worry that the contributions by existing members has dwindled, while the number of pensioners has increased. With demands to increase the minimum monthly pension, the very feasibility of the social security scheme is being questioned.

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