Context:
A parliamentary panel has urged the Labour Ministry to complete the third-party evaluation of the Employee Pension Scheme (EPS) by end of 2025. This marks the first such evaluation of the scheme since its inception 30 years ago. The review is expected to make the scheme more effective and address issues faced by its beneficiaries.
Key Recommendations from the Parliamentary Standing Committee
- Third-Party Evaluation: The Standing Committee on Labour, led by BJP MP Basavaraj Bommai, emphasized the importance of completing the evaluation within a definite timeframe, aiming for completion by December 2025.
- Increase Minimum Pension: The committee recommended that the Labour Ministry should urgently consider raising the minimum pension under the EPS, which is currently set at ₹1,000 per month. Given the sharp rise in the cost of living, there is a call for an upward revision of this amount to provide better financial support to pensioners.
Background on EPS
- Inception: The Employee Pension Scheme (EPS) was introduced in November 1995 and is administered by the Employees’ Provident Fund Organisation (EPFO).
- Current Minimum Pension: Under the current structure, if a pension is below ₹1,000, the central government provides a grant to cover the gap. The scheme has not undergone a third-party evaluation until now, despite its long-standing operation.
Concerns
- Wages and Contributions: Labour economist KR Shyam Sundar pointed out that the majority of EPS subscribers are low-paid workers, which limits their ability to contribute significantly towards their pension. This results in a low pension despite long years of service.
- Wage Stagnation and Inflation: Sundar highlighted that wage stagnation and rising inflation have significantly reduced the corpus accumulated during the working years of these workers, leading to minimal pensions upon retirement. The timely evaluation is seen as a step to address these shortcomings.
The third-party evaluation of EPS, coupled with discussions on revising the minimum pension, is crucial for addressing the long-standing issues within the scheme. With the cost of living continuing to rise, it has become increasingly important to ensure that EPS pensioners receive adequate support during retirement. The evaluation will provide valuable insights into the scheme’s effectiveness and sustainability, and its recommendations could lead to meaningful reforms.
