• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Home
  • DOPT ORDERS 2020
  • FinMin Orders 2020
  • Railway Orders 2020
  • Contact Us

7th Pay Commission Latest news

Central Government Employees News

  • DOPPW Orders
  • 7th Pay Commission
  • Dearness Allowance
  • Dearness Relief
  • CSD Price List
  • Defence
    • Defence Pension
You are here: Home / EPF / Clean up the employees’ pension scheme

Clean up the employees’ pension scheme

August 25, 2016 pcadmin Leave a Comment

Clean up the employees’ pension scheme

Though a majority of organised workers are covered under the Employees’ Pension Scheme (EPS) 1995, there is still very low transparency level. Many readers might not have even heard about it because EPS is not a separate scheme. It is just an add-on to the Employee Provident Fund (EPF) scheme and all EPF members also automatically become EPS members.

The EPS is plagued with several problems. First, the pension provided by it is very low (i.e. minimum pension under EPS scheme now is only  Rs 1,000 per month). As per the current structure, pension is fixed based on the formula given below: Average salary for the last 5 years x No of years completed in service 70 All EPF members are eligible for pension after 10 years of contribution to EPS. The pension from EPS is low because the contribution is also low. At present, employees don’t contribute towards EPS. The employer contributes 8.33% of salary ( i .e. basic + Dearness Allowance) towards EPS, the definition of salary here is restricted to Rs 15,000 for employees whose salary (i.e. basic + DA) is above this limit.So for them, the EPS contribution will be restricted to Rs 1,250 per month or Rs 15,000 per annum.

The Rs 15,000 restriction comes at the time of pension calculation as well. If your salary (basic + DA) is above that, pension will be computed only on Rs 15,000. So the maximum pension one can get now (assuming 35 year service) is Rs 7,500.There are reports about EPFO (Employees Provident Fund Organisation) allowing members to contribute more voluntarily to the EPS for getting enhanced benefits after retirement. However, EPS subscribers will be ready to increase their contribution only if the pension is based on the contribution made by the employee throughout the period and not on the number of years last drawn salary . Second, this small pension from EPS (i.e. placed now between Rs 1,000 and Rs 7,500), is not inflation linked like pension for government employees, who joined service before 2004. Since the cost of living increases due to inflation, this “small pension“ now will become “smaller“ in later years.

Third, while employees are complaining about low pension from EPS, the scheme is battling huge deficit. This is because there is no direct linkage between the contribution made by employees and the pension received by them. As of now, EPS is working on the base of new contribution -i.e. contribution from new employees are used to pay the pension for retired ones.Though this may be sustainable for some time because of the demographic dividend in India (i.e. large number of youngsters getting into work force compared to few retired ones), this will not be sustainable in long term. This is because of the expected demographic profile change and the change in employment structure (i.e. more and more companies are hiring people on contract, so they may be outside the EPS ambit). Government doesn’t reveal actuarial valuation of pension liabilities from EPS on regular basis, so only estimates are available on its deficit figures -assumed to be more than Rs 50,000 crore.In addition to cleaning up this mess, government should also release this deficit on regular basis, at least on annual basis, for the sake of transparency .

ET

Filed Under: EPF, EPFO

Also Read

Union Budget 2023 : Live Updates

Union Budget 2023 : Live Updates

February 1, 2023 By pcadmin Leave a Comment

Union Budget 2023 : Live Updates 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐭𝐡𝐞 𝐟𝐢𝐫𝐬𝐭 𝐛𝐮𝐝𝐠𝐞𝐭 𝐢𝐧 𝐀𝐦𝐫𝐢𝐭 𝐊𝐚𝐚𝐥. Budget focuses on 7 priorities, ‘saptrishi guiding us through Amrit Kaal’ This budget hopes to build on the foundation laid in the previous budget and the blueprint drawn at India at 100. … [Read More...] about Union Budget 2023 : Live Updates

AICPIN for the month of December 2022

AICPIN for the month of December 2022

February 1, 2023 By pcadmin Leave a Comment

AICPIN for the month of December 2022 Consumer Price Index for Industrial Workers for December, 2022 The Labour Bureau, an attached office of the Ministry of Labour & Employment, has been compiling Consumer Price Index for Industrial Workers every month on the basis of retail prices … [Read More...] about AICPIN for the month of December 2022

One Rank One Pension to the Defence Forces Pensioners. orop

One Rank One Pension to the Defence Forces Pensioners.

January 24, 2023 By pcadmin Leave a Comment

One Rank One Pension to the Defence Forces Pensioners. No. 1(1)/2019/D(Pen/Pol)/Vol-IIGovernment of IndiaMinistry of DefenceDepartment of Ex-Servicemen Welfare New Delhi, Dated: 20th January 2023 ToThe Chief of the Defence StaffThe Chief of the Army StaffThe Chief of the Naval StaffThe … [Read More...] about One Rank One Pension to the Defence Forces Pensioners.

Addendum for early closure of all the offices falling in the premises of Parliament House & Rashtrapati Bhawan in c/w forthcoming Republic Day

Addendum for early closure of all the offices falling in the premises of Parliament House & Rashtrapati Bhawan in c/w forthcoming Republic Day

January 23, 2023 By pcadmin Leave a Comment

Addendum for early closure of all the offices falling in the premises of Parliament House & Rashtrapati Bhawan in c/w forthcoming Republic Day No.16/3/2023-JCAGovernment of IndiaMinistry of Personnel Public Grievances and Pensions(Department of Personnel and Training)Establishment (JCA) … [Read More...] about Addendum for early closure of all the offices falling in the premises of Parliament House & Rashtrapati Bhawan in c/w forthcoming Republic Day

Linking of CGHS Beneficiary ID with the ABHA ID

Linking of CGHS Beneficiary ID with the ABHA ID

January 20, 2023 By pcadmin Leave a Comment

Linking of CGHS Beneficiary ID with the ABHA ID F.No. 44/67/MCTC/CGHSGovernment of IndiaMinistry of Health & Family WelfareDepartment of Health & Family Welfare Nirman Bhawan, New DelhiDated the January, 2023 OFFICE MEMORANDUM SUBJECT: Linking of CGHS Beneficiary ID with the ABHA … [Read More...] about Linking of CGHS Beneficiary ID with the ABHA ID

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

All About Pension

All about Pension

Latest DOPT Orders

Addendum for early closure of all the offices falling in the premises of Parliament House & Rashtrapati Bhawan in c/w forthcoming Republic Day

Early Closure of Offices in connection with Republic Day Parade/Beating Retreat Ceremony/At Home Function during January, 2023

Review of CSS Officers (Under Secretary) under FR 56(j) and Rule 48 of CCS (Pension) Rules, 1972

Year-End- Review of DoPT(Ministry of Personnel, Public Grievances & Pensions)-2022

Extension of the LTC block year 2018-21 (extended) for a period of three months

Latest Finmin Orders

Compendium of Instructions regarding grant of House Rent Allowance to Central Government employees – FINMIN

CGEGIS 1980: Table of Benefits of saving funds from Oct to Dec 2022

Non-Productivity Linked Bonus (ad-hoc bonus) to Central Government Employees for 2021-22

FINMIN : Dearness Allowance to Central Government employees effective from 01.07.2022.

Compendium of Instructions regarding grant of Transport Allowance at double the normal rates to persons with disabilities employed in Central Government

Latest Railway Orders

Implementation of Railway Services (Revised Pay) Rules, 2016

Computer Advance Interest Rate 2022-23 for Railway Employees

Eligibility of married disabled child for family pension – Railway Board order

Grant of Leave to Probationary officers: Railway Board

Productivity Linked Bonus to all eligible non-gazetted Railway employees for 2020-2021

Categories

Copyright © 2023