EPS Pension Hike: The Central Government is considering increasing the minimum pension from ₹ 1,000 per month to ₹ 3,000 under the Employees Pension Scheme (EPS). A senior government official told Moneycontrol that the decision could be applicable in the next few months. This initiative is taking place at a time when there is increasing concern over the continuous increase 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 give a certain monthly income to private sector employees after retirement. The fund of this scheme comes from the contribution of the employer i.e. the company. Its EPF (Employees’ Provident Fund) contributes 8.33% out of total 12% to EPS and the rest is 3.67% EPF.
The government official said, “We are preparing to make the minimum pension ₹ 3,000 per month. It was pending for a long time.” Earlier in 2020, the Ministry of Labor sent a proposal to the Ministry of Finance to the minimum pension to ₹ 2,000, but it was not approved.
₹ 7,500 pension also demands
During the discussion before the budget in 2025, a delegation of EPS retired employees had demanded Finance Minister Nirmala Sitharaman to reduce the minimum pension ₹ 7,500, but he did not get any assurance.
Currently, the total fund of EPS is more than ₹ 8 lakh crore. There are about 78.5 lakh pensioners under this scheme. Of these, 36.6 lakh people are getting the minimum pension of just ₹ 1,000 per month.
Brainstream continues on financial impact
The official said that the Ministry of Labor is currently evaluating the additional cost related to implementing ₹ 3,000 pension. In FY 2023-24, the government spent ₹ 1,223 crore to give minimal pension to EPS pensioners, which is spent in FY23 ₹ 970 crore more than 26%.
From September 2014, the government gives grants to ensure the minimum pension ₹ 1,000, that is, if the pension of a member is less than ₹ 1,000, then the government fills the difference with its pocket.
Opinion of parliamentary committee and experts
Recently, the Parliamentary Committee headed by BJP MP Basavraj Bommai recommended the Ministry of Labor to increase the minimum EPS pension immediately, as inflation has increased rapidly.
Grant Thorrton India partner Akhil Chandna said, “If the minimum pension is increased, it will be a welcome step, especially for retired class of lower-class retired employees and their dependent families.”
BJP -associated economist Sandeep Vampati told Moneycontrol that the retail inflation (CPI) has increased by 72% between March 2014 and March 2025. The International Labor Organization (ILO) also advocates pension to inflation. However, due to the global economic uncertainty and the fiscal strategy of the government, the timing and pension amount of this proposal remains confused.