Demands to Increase EPS-95 Pension to Rs 9,000 Intensify, Learn What the Government and Calculations Say

EPFO Pension: Several labor unions across the country have once again intensified their demand to increase the minimum pension under the Employees’ Pension Scheme 1995 from Rs 1,000 to Rs 9,000 per month. This issue is no longer limited to organizations, but has reached Parliament and the Supreme Court. Consequently, EPS-95 has once again become a topic of national debate.

What is the Employees’ Pension Scheme 1995?

The Employees’ Pension Scheme 1995 is a social security scheme launched for private employees in the organized sector. It is administered by the Employees’ Provident Fund Organization (EPFO). This scheme provides a monthly pension after retirement to employees who have completed a minimum of 10 years of service.

When an employee contributes to the EPF, 8.33 percent of the employer’s share is deposited into the pension fund. Additionally, the central government contributes 1.16 percent of the salary limit up to ₹15,000. The employee begins receiving a pension after the age of 58. However, this pension is not linked to inflation, which may reduce its actual value over time.

Status of the Current Pension System

Currently, the minimum pension under EPS-95 is fixed at ₹1,000 per month. If a pensioner’s calculated amount falls below this limit, the government provides budgetary support to supplement the amount by ₹1,000. The maximum pension is calculated based on a salary limit of ₹15,000. If an employee has completed 35 years of pensionable service, the formula allows them to receive a monthly pension of approximately ₹7,500.

However, following recent Supreme Court rulings, some employees have the option to contribute based on their actual salary. In such cases, the pension amount can exceed ₹7,500, and some pensioners are receiving ₹9,000 or more.

The government’s stance and statement in Parliament

In response to a question in the Lok Sabha, Minister of State for Labor Shobha Karandlaje acknowledged that trade unions and public representatives have demanded an increase in the minimum pension. However, the government has not yet announced a specific timeline in this regard.

The government states that EPS-95 is a fixed-contribution, fixed-benefit scheme. Its financial structure is based on an employer contribution of 8.33 percent and a central government contribution of 1.16 percent. Additionally, the government provides separate budgetary support to ensure a minimum pension. However, approximately 4.7 million pensioners receive a pension of less than ₹9,000. This is why this issue remains socially and politically significant.

What is the challenge in increasing the minimum pension directly to Rs 9,000?

Increasing the minimum pension from Rs 1,000 to Rs 9,000 would mean a nine-fold increase. Since the scheme is based on fixed contributions, such a significant increase could put significant pressure on the pension fund. An actuarial evaluation is conducted every year to assess future liabilities and the fund’s sustainability. The government states that before making any decision, it is important to ensure the long-term sustainability of the pension fund.

Supreme Court Directive on Salary Limit

The Supreme Court has directed the Central Government to review the EPFO’s salary limit of Rs 15,000 at the beginning of 2026 and take a decision within four months. This limit has been in effect since September 1, 2014, when it was increased from Rs 6,500 to Rs 15,000. Pension calculations are based on pensionable salary, so if the salary limit is increased, the pension amount may also increase.

If the pay limit were raised to ₹25,000

The pension formula under EPS-95 is:

Pensionable pay is based on the average basic pay and dearness allowance for the last 60 months. A minimum of 10 years and a maximum of 35 years of service are considered pensionable. If the pay limit were raised to ₹25,000, and a person had 10 years of service, they would receive approximately ₹3,570 per month. A person with 35 years of service would receive a monthly pension of approximately ₹12,500. This clearly demonstrates that raising the pay limit alone would not provide every pensioner with ₹9,000.

Future Prospects

It is possible that instead of a direct major increase, the pension could be gradually increased under the existing formula by amending the pay limit. The government has stated in Parliament that it is committed to strengthening social security through schemes like EPF, EPS-95, and EDLI, but it is also important to maintain the funds’ financial stability. The final decision will be made after considering the state of the pension funds, Supreme Court directives, and the additional financial burden on the government. Currently, all eyes are on the wage ceiling review.