The government has decided to extend the Rs1,000 per minimum monthly pension scheme beyond the 2014-15 financial year, on a perpetual basis, a move that will benefit over 2 million pensioners under social security scheme run by the Employees Provident Fund Organisation (EPFO).
''The union cabinet chaired by the Prime Minister Narendra Modi today gave its approval for continuation of the minimum pension of Rs1,000 per month to the pensioners of Employees' Pension Scheme, 1995 (EPS) beyond the financial year 2014-15 on perpetual basis,'' an official release said.
The cabinet also approved corresponding grant of continuous annual budgetary support for implementing the minimum pension, which will be around Rs850 crore per year, on a tapering basis.
''Providing a minimum pension of Rs1,000 per month is an effort to provide meaningful subsistence to pensioners who have served in the organised sector. The present proposal is likely to benefit approximately 20 lakh pensioners under EPS, 1995,'' the release said.
''A large number of pensioners under the EPS, 1995 receive low pensions, which is not commensurate with the growing cost of living. The primary reason behind a meager pension is that it is calculated on the basis of pensionable service and average of last sixty months' wages. If either of them is low, the pension amount will also be low. This is largely seen in cases of employees of seasonal industries,'' it added.
Further, pensioners who were earlier members of the erstwhile Family Pension Scheme, 1971 have been given past service benefits for determining pension as per provisions of the Employees' Pension Scheme. This has resulted in fixation of low pension for these pensioners.
The union cabinet at its meeting in February 2014, had accorded approval to the proposal for ensuring a minimum pension of Rs1,000 per month for the pensioners of EPS for the financial year 2014-15 by way of providing budgetary support of Rs1,217.03 crore. Subsequently, the Employees' Pension Scheme, 1995 (EPS) was amended on 19 August 2014 to incorporate the provision for providing a minimum pension of Rs1,000 per month for the financial year 2014-15.
After the changes were notified in the Gazette on 19 August 2014 (effective 1 September 2014), the EPFO commenced disbursing the revised pension from the September 2014.