The recommendation of the Central Board of Trustees of the Employees’ Provident Fund Organisation (EPFO) for a 0.1-percentage-point increase in provident fund (PF) deposits for 2023-24 should not be surprising, as it is in tune with what the EPFO did last year. However, the recommended rate of 8.25% is 0.4-percentage points lower than in 2018-19, a pre-election year like 2023-24. If cleared by the Union Finance Ministry, it will involve the transfer of a record ₹1,07,000 crore to EPF members. But the development has not pleased those with a long-standing demand for an increase in the minimum pension of ₹1,000. When in the opposition, the ruling Bharatiya Janata Party had demanded that the pension be raised to ₹3,000 (the UPA government had proposed ₹1,000 a month). On coming to power in 2014, the BJP carried out faithfully, with effect from September 2014, what was finalised by its predecessor, benefitting approximately 20.5 lakh pensioners. Months ago, the Finance Ministry had rejected a proposal to double the minimum pension amount, citing a “huge rise” in the budgetary support needed under the Employees’ Pension Scheme (EPS), 1995. There is one more component in the budgetary support which refers to the Central government’s contribution at 1.16% of wages up to an amount of ₹15,000 a month. For FY2024-25, the Ministry has projected ₹10,950 crore as budgetary support against the revised estimate of ₹ 9,760 crore for the current year. The Finance Ministry calculates that a 100% rise in the minimum pension would be more than the proportionate increase in the overall budgetary support as numerous pensioners had received much less than ₹1,000 as monthly pension till 2014.
Describing the EPS as a “Defined Contribution-Defined Benefit” social security scheme, the government said in the Rajya Sabha that all benefits were paid out of accumulations through contributions, and as per the fund’s valuation as on March 31, 2019, there was “an actuarial deficit.” However, this argument has been virtually demolished in the EPFO’s annual report (2022-23). Notwithstanding its reasons not to hike the minimum pension, the government must note that the difference between the minimum and original pension was about ₹970 crore for 2022-23. So, the doubling of minimum pension is no strain. There are other key issues too such as equating the amount of spouse pension on a par with what a member-pensioner gets. In the case of higher PF pension, the rules have been framed after the 2022 Supreme Court judgment wherein most of the pre-2014 retirees would not be covered; there are around four lakh such applications for higher pension. A more expansive approach to PF pension matters will help senior citizens.
Published - February 15, 2024 12:10 am IST
