EPFO, the Employees’ Pension Fund Organization, is considering a new pension product for organized sector workers who earn more than Rs 15,000 per month but are not covered by the Employees’ Pension Scheme of 1995. (EPS-95).
At the moment, EPS-95 covers all employees in the organized sector whose basic salary (basic pay plus dearness allowance) is up to Rs 15,000 per month at the time of commencing service.
“Members of the Employees’ Provident Fund Organisation have asked for a larger pension based on increasing contributions (EPFO). As a result, a new pension product or program for those with monthly basic earnings over Rs 15,000 is being actively considered “PTI obtained information from a person close to the situation.
According to a source, the proposal for this new pension plan may be discussed at EPFO’s ultimate decision-making body, the Central Board of Trustees (CBT), meeting on March 11 and 12 in Guwahati.
A sub-committee formed by the CBT on pension-related problems in November 2021 will also provide its report during the meeting.
According to the source, EPFO members who earn more than Rs 15,000 per month in basic pay are required to contribute less (at the rate of 8.33 percent of Rs 15,000 per month into EPS-95), resulting in a smaller pension. In 2014, the EPFO changed the scheme to cap monthly pensionable base salaries at Rs 15,000 per month.
The Rs 15,000 limit is only in effect at the time of enlistment. It was raised from Rs 6,500 to Rs 7,500 on September 1, 2014, due to price increases and pay adjustments in the official sector.
Later, there were requests and discussions on raising the monthly basic salary threshold to Rs 25,000, but the proposal was rejected.
According to industry estimates, increasing pensionable salary might have brought 50 lakh more workers into the EPS-95 net.
“The Employees’ Provident Fund Organisation has proposed that the wage ceiling for coverage under the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 be increased from Rs 15,000 to Rs 25,000 per month (EPFO). There has been no decision made in this regard “In a written reply to the Lok Sabha in December 2016, former labor minister Bandaru Dattatreya stated.
According to the source, a new pension product is needed for people who are either forced to contribute less or who were unable to join the program because their monthly basic wages were more than Rs 15,000 when they started working.
According to the source, the EPFO has no plans to raise the pensionable income cap soon, and in that case, the organization must consider providing coverage to those formal sector workers who are excluded from the EPS-95 due to higher basic pay.
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