Current Minimum Pension under EPFO
As of now, the minimum pension provided under the Employees’ Pension Scheme (EPS) 95 is Rs 1,000 per month. This amount has been a point of contention among pensioners, who argue that it is insufficient to meet basic living expenses.
Formula for Calculating Pension under EPS
The pension amount under the EPS scheme is calculated using a specific formula:
\[ \text{Pension Amount} = \frac{\text{Pensionable Salary} \times \text{Pensionable Service}}{70} \]
Here, the Pensionable Salary is the average monthly salary of the last 60 months, and Pensionable Service refers to the number of years an employee has contributed to the EPS.
Difference between EPF and EPS-95
The Employees’ Provident Fund (EPF) and the Employees’ Pension Scheme (EPS-95) serve different purposes. EPF is a retirement benefit scheme where employees and employers contribute a certain percentage of the salary to build a retirement corpus. EPS-95, on the other hand, is designed to provide a pension to employees post-retirement. While contributions to EPF can be withdrawn as a lump sum, EPS-95 offers a monthly pension.
EPS Rules on Pension Eligibility
To be eligible for a pension under EPS-95, an employee must have completed at least 10 years of service. The pension is payable from the age of 58 years. Early pension can be availed from the age of 50, but it will be subject to a reduction at the rate of 4% per year.
Pensioners Demand Increase
Approximately 7.8 million pensioners have been advocating for an increase in the minimum pension to Rs 7,500 per month. They argue that the current pension amount is inadequate to sustain a dignified life post-retirement. Despite these demands, the government has yet to implement any changes to the minimum pension amount under EPS-95.
In summary
while the EPS-95 provides a framework for post-retirement income, the current minimum pension amount of Rs 1,000 is seen as insufficient by many pensioners. They continue to press for a substantial increase, highlighting the need for reforms to ensure financial security for retired employees.
