Monday, December 5, 2011

EFPO likely to fix minimum pension at Rs 1000, decision on 23rd.

The Employees Provident Fund Organization (EPFO) is mulling over fixing the minimum pension for its subscribers at Rs 1,000 a month. The issue would be discussed by its trustees at their next meeting on December 23.

“The EPFO’s apex decision-making body, the Central Board of Trustees headed by the labour minister, will take a call on the proposal in a meeting on December 23,” a source privy to the development said. According to EPFO data, as of March 31, 2010, 3.5 million pensioners subscribed to the retirement fund body. Of this, 1.4 million persons got a monthly pension of less than Rs 500.
About 7,00,000 EPFO pensioners get a monthly pension of Rs 1,000. The data reveals cases where some were getting a monthly pension as low as Rs 12 and Rs 38.
“In the present scenario, when the cost of living has gone up due to high inflation, the minimum pension should not be less than Rs 2,000 a month,” suggested Hind Mazdoor Sabha Secretary A D Nagpal. He added, “Even the senior citizen pension ranges from Rs 400 to Rs 1,000 a month across states without any contribution.”
Although the representatives of employers and employees have agreed on fixing the minimum pension at Rs 1,000 a month, there is no decision on the means of raising the additional fund requirement. According to estimates, the decision will require an additional contribution of 0.63 per cent of subscribers’ basic pay and dearness allowance.
The increase in contribution will be over-and-above the 8.33 per cent contributed by employers towards the pension account of employees, as well as the 1.16 per cent provided by the government under the scheme. If the government decides to bear the extra cost, an amendment to the Employees’ Pension Scheme would be needed.
“It is possible that the trustees decide on sharing of additional burden equally by government, employees and employers,” a trustee said. Further, the board is likely to discuss the proposal to issue pass books to subscribers on the lines of banking services for certain categories of workers, particularly construction labourers.
EPFO has a subscriber base of over 47.1 million and manages a corpus of Rs 3.5 lakh crore.
Source : Business Standard

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