NEW DELHI: The labour ministry has moved a Cabinet note saying the government should raise the monthly pension for organised-sector workers to Rs 1,000 and fund the differential, despite the proposal cutting no ice with finance ministry.The Cabinet note, moved by Labour Minister Mallikarjun Kharge, has put out three options, but his ministry is keen that the burden of providing the extra pension does not fall on employees.
"We have proposed that finance ministry could either take on the entire burden by contributing more, or share it equally with the employers and employees, or pass it on to employees by taking away the bonus that subscribers get after 20 years," an official told ET.
Over a million organised-sector workers enrolled under the annuity scheme of the Employees Provident Fund Organisation (EPFO) get a monthly pension of less than Rs 500. The labour ministry wants it to be raised to at least Rs 1,000, but North Block has refused to share the extra financial burden estimated at about Rs 539 crore every year.
The Cabinet is expected to take a call on the issue soon, the official said. As per the labour ministry's calculations, a pension of Rs 1,000 per month would mean employees or employers would have to contribute an extra 0.63% of basic wages towards the Employee Pension Scheme (EPS).
At present, employers contribute 8.33% of an employee's basic salary, subject to a maximum of Rs 541 a month, towards the EPS, while the Centre contributes 1.16% of it.
Alternatively, the labour ministry has suggested that in lieu of this higher pension employees forgo the bonus they get for staying in the scheme for at least 20 years.
According to the official, the Cabinet note was moved without a final discussion with the Central Board of Trustees, the highest decision-making body of the EPFO, as the ministry felt that the issue could not be resolved there. The Board of Trustees was unable to take a decision in the past as neither the employers nor the employees wanted to share the burden.
"The finance ministry is reluctant to take on the burden and so are the employees. The matter is best left to the judgement of the Cabinet," the official said. Under EPS, about 1.28 million pensioners get a monthly annuity of less than Rs 500 while about 1.5 million get between Rs 500 and Rs 1,000. The figure for those drawing more than Rs 1,000 a month is 730,000.
"Most of our pensioners get a pittance every month, which in some cases is as low as 12. The government wants that the minimum amount should be substantial to make some kind of a difference in their lives," the official said.
Employee unions, too, want the government to shoulder the additional burden. "We have already rejected the two proposals at the CBT meeting that would require workers to fund the entire increase in minimum pension, said Bhartiya Mazdoor Sangh's BL Todi.
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3 Comments on this Story
Arun Sabharwal2916 days ago
Everybody knows that all Govt Employees under GPF scheme & Politicians get Hand full of pension without contributing from their salary .
Where as Employees under EPF scheme contributing part of their monthly salary during their entire service get pension meager of Two digits.Which fetch nothing in these high inflation era. This is pathetic condition Really these EPF pensioners. are slaves of this country and get step motherly treatment. I hope Govt will wake up and give good relief to these EPF pensioners.
Also I request to trade unions leaders / Indian govenment to take a farely action to make old age happier . This will a great help to private sector employees. Keep it up dear Finance Minister . Thanks in advance -Arun Sabharwal - New Delhi.
Kamble G T 2930 days ago
Govt Employees under GPF scheme & Politicians get Hand full of pension without contributing from their salary .
Where as Employees under EPF scheme contributing part of their monthly salary during their entire service get pension meager of Two digits.Which fetch nothing in these high inflation era. This is pathetic condition Really these EPF pensioners. are slaves of this country and get step motherly treatment. I hope Govt will wake up and
give good relief to these EPF pensioners.
TelliameD 2945 days ago
Pathetic. How could employee unions agree to these pensions? Have they been sleeping? Why don't these govt employees go on a strike to demand better compensation? The fact that these unions will strike if they are on the verge of disinvestment but won't strike for the sake of fair compensation raises serious doubts about what are their real sources of income.