The Employees’ Pension Scheme has registered a steady growth in its scope with the number of pensioners, payouts and the corpus rising steadily over the years but those receiving a meaningful monthly pension under the scheme remain low.
Just 26,769 members received a monthly pension of above Rs 5,000 per month while a majority of members at 3.64 million received a monthly pension of up to Rs 1,000, which is the minimum monthly pension mandated under the scheme. On a monthly basis, over 1.8 million pensioners have benefitted from minimum pension of Rs 1,000 per month in the fiscal year 2022-23.
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The data is part of the Employees’ Provident Fund Organisation’s latest Annual Report 2022-23. It reveals that the number of pensioners receiving monthly pension of above Rs 1,000 declines progressively. A little over 1.17 million pensioners received a monthly pension between Rs 1,001 and Rs 1,500 while 868,000 pensioners received a monthly pension of Rs 1,501 and Rs 2,000.
Back of the envelope calculations reveal that the average pension under the EPS that formal sector workers in the country receive after retirement is a meagre Rs 1,506 per month.
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A proposal to revamp the EPS remains under discussion while the EPFO is working to implement the Supreme Court ruling on higher pension. Previously, the Parliamentary Standing Committee on Labour had called for enhancing the minimum pension under the EPS to Rs 2,000 per month, noting that the current amount is grossly inadequate. Pensioners too have been seeking higher pension under the scheme.
The EPS, 1995 is funded by diversion of an amount equivalent to 8.33 per cent of the monthly wages from the monthly employer’s share of Provident Fund contributions as well as a contribution of 1.16 per cent of the monthly wages (limited to the amount payable on pay of Rs 15,000 only) by the Central Government.
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As per the data, a total of Rs 21,796.85 crore was paid out by the Employees’ Pension Scheme in 2022-23 to over 7.55 million pensioners. Of this, Rs 14,444.6 crore was disbursed as pension while another Rs 7,352.25 crore was paid out as withdrawal benefits last fiscal. “The Fund has not witnessed any cash flow problems till now, in spite of there being a projected actuarial deficit in the valuation of the fund,” said a source, adding that it continues to have higher receipts than outgo since inception.
Along with the increase in the pension and withdrawal benefit payments; there has been a continuous increase in the receipts and corpus due to growth in the membership as well as general increase in wages. The accumulated corpus of the EPS has grown steadily and since the year 2017-18, corpus has increased by almost 98% to Rs 7.8 lakh crore by the end of last fiscal.
