Trustees of Retirement fund body EPFO will decide tomorrow on amending the scheme to provide a minimum monthly pension of Rs 1,000, which will immediately benefit about its 28 lakh (2.8 million) pensioners.
The Central Board of Trustees (CBT), the apex decision making body of EPFO, will also decide on amending EPF scheme 1952 to raise the monthly wage ceiling to Rs 15,000 to cover more workers under its various social security programmes like Employees' Provident Fund (EPF)Scheme 1952, Employees' Pension Scheme 1995 (EPS-95) and Employees' Deposit Linked Insurance (EDLI) Scheme 1976.
At present, workers getting basic wages, including basic pay and DA, of up to Rs 6,500 are covered under the ambit of Employees' Provident Fund Organisation (EPFO).
According to EPFO, the Finance Ministry has already approved the Labour Ministry's proposals for entitlement of minimum monthly pension of Rs 1,000 and enhancing wage ceiling to Rs 15,000 per month.
The government would have to provide an additional amount of Rs 1,217 crore (Rs 12.17 billion) to ensure the minimum pension of Rs 1,000 starting 2014-15. Pensioners are, therefore, expected to get benefit with effect from April 1 this year.
As per the agenda listed for the meeting, the trustees would meet on February 5 to approve the amendment in schemes run by EPFO to operationalise the two decisions.
The Central Board of Trustees (CBT), the apex decision making body of EPFO, had earlier approved the two proposals, following which the Labour Ministry pursued it with the Finance Ministry.
According to sources, after the nod given by the CBT, headed by the Labour Minister Oscar Fernandes, the two proposals would be put before the Union
Cabinet for approval as the government would have to make provision of funds for the purpose.
The move to ensure Rs 1,000 minimum pension under EPS-95 will immediately benefit about 28 lakh pensioners including 5 lakh widows. There are about 44 lakh pensioners.
The other proposal for raising wage ceiling under EPF Scheme from Rs 6,500 to Rs 15,000 is expected to bring in 50 lakh more workers under the ambit of schemes run by EPFO.
Besides, the trustee would also consider a proposal to raise the retirement age of organised sector workers to 60 years under EPS-95.
At present, under EPS-95, the EPFO subscribers cease to be a member of the pension scheme after attaining the age of 58 years and can apply for fixation of his/her pension thereafter.
However, there is no age bar for contributing to the EPF and EDLI schemes run by the EPFO.
The CBT is also expected to deliberate on a proposal to withdraw two years bonus under the pension scheme provided to subscribers after rendering 20 years of pensionable service.
The Finance Ministry in its memorandum to Labour Ministry has proposed these amendments in the EPS-95 after giving its concurrence for providing a minimum entitlement of Rs 1,000 minimum monthly pension under the scheme.
The Finance Ministry is of the view that raising the retirement age for this purpose will help subscribers accumulate a bigger corpus while delaying the pay-out by two years.
Besides, the trustees will also consider the proposal for changing the methodology of computing the pensionable salary.
It is proposed to calculate pensionable salary on the basis of average salary of last 60 months instead of 12 months presently.
The pensionable salary is used for fixing pension of the EPFO subscribers after attaining the age of 58 years.
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The Central Board of Trustees (CBT), the apex decision making body of EPFO, will also decide on amending EPF scheme 1952 to raise the monthly wage ceiling to Rs 15,000 to cover more workers under its various social security programmes like Employees' Provident Fund (EPF)Scheme 1952, Employees' Pension Scheme 1995 (EPS-95) and Employees' Deposit Linked Insurance (EDLI) Scheme 1976.