A senior government official told Moneycontrol that this decision may come into effect in the next few months. This initiative is coming at a time when there is a growing concern over the continuous rise in inflation and social security of the elderly.

What is EPS?

EPS is a retirement scheme for organized sector employees in India. It is run by the Employees’ Provident Fund Organization (EPFO). Its purpose is to provide a fixed monthly income to private sector employees after retirement. The fund for this scheme comes from the contribution of the employer i.e. the company. Out of its total 12% contribution to EPF (Employees’ Provident Fund), 8.33% goes to EPS and the remaining 3.67% goes to EPF.

The government official said, “We are preparing to increase the minimum pension to ₹ 3,000 per month. This was pending for a long time.” Earlier in 2020, the Labor Ministry had sent a proposal to increase the minimum pension to ₹ 2,000 to the Finance Ministry, but it was not approved.

There is also a demand for ₹ 7,500 pension

During the pre-budget discussions in 2025, a delegation of EPS retired employees had demanded from Finance Minister Nirmala Sitharaman to increase the minimum pension to ₹ 7,500, but did not get any assurance.

At present, the total fund of EPS is more than ₹ 8 lakh crore. There are about 78.5 lakh pensioners under this scheme. Out of these, 36.6 lakh people are getting a minimum pension of just ₹ 1,000 per month.

Deliberation continues on financial impact

The official said the labour ministry is currently evaluating the additional cost associated with implementing the ₹3,000 pension. In FY2023-24, the government spent ₹1,223 crore to provide minimum pension to EPS pensioners, which is 26% more than the ₹970 crore spent in FY23.

Since September 2014, the government has been providing a subsidy to ensure a minimum pension of ₹1,000, i.e. if a member’s pension is less than ₹1,000, the government pays the difference out of its own pocket.

Opinion of Parliamentary Committee and Experts

Recently, a parliamentary committee headed by BJP MP Basavaraj Bommai had recommended the Labour Ministry to immediately increase the minimum EPS pension as inflation has risen rapidly.

Akhil Chandna, partner, Grant Thornton India, said, “If the minimum pension is increased, it will be a welcome move, especially for low-income group retired employees and their dependent families.”

Sandeep Vempati, an economist associated with the BJP, told Moneycontrol that the retail inflation rate (CPI) has increased by 72% between March 2014 and March 2025. The International Labor Organization (ILO) also advocates linking pension to inflation. However, due to global economic uncertainty and the government’s fiscal strategy, there is confusion over the timing of this proposal and the amount of pension.

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A standing committee of Parliament has asked the Ministry of Labor to complete the evaluation of EPS from a third party within a specified time frame.

In fact, for a long time, pensioners have been demanding that the minimum pension amount under the Employees’ Pension Scheme be increased. In 2014, the Employees’ Provident Fund Organization (EPFO) had fixed the minimum guaranteed pension at Rs 1,000 for those EPFO ​​members who contribute to the pension scheme for at least 10 years.

According to the report, this is the first time that the government will get the EPS evaluated by a third party. EPS was started three decades ago. Now it is also known as EPS-95.

The standing committee headed by Bharatiya Janata Party MP Basavaraj Bommai wants this evaluation process to be completed by the end of 2025 by the Labor Ministry. In view of this, the committee has asked the Labor Ministry to take up the matter promptly so that the minimum pension amount of Rs 1,000 under EPS can be increased.

What else did the parliamentary committee say?

The committee has said in its report that in the last few years the cost of living has increased manifold. That is, inflation has increased manifold, but the pension amount remains the same.

EPS was started in the year 1995. The aim of this scheme is to ensure a fixed income to the employees after retirement. The Standing Committee of Parliament has said in its report that after 30 years, EPS is being evaluated by some party. The committee recommends that this evaluation should be completed by a certain time frame i.e. by the end of 2025.

After this, the ministry has told the committee that the process of third party review has been started through Request for Proposal (RFP) and the work is currently underway. The ministry has also told the committee that no such review has ever been done before.

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The post EPS Pension Hike: EPS pension will increase from ₹ 1000 to ₹ 7500? know all details first appeared on Rightsofemployees.com.