A long-pending demand of EPFO pensioners may finally move forward, with the labour ministry reportedly examining a revision in the minimum monthly pension under the Employees’ Pension Scheme (EPS-95). The present guaranteed pension stands at Rs 1,000 a month, and any upward revision could bring relief to lakhs of retirees receiving low payouts.No official figure has been announced yet. But if the minimum pension is revised to Rs 1,500, Rs 2,000, Rs 2,500 or Rs 3,000, the biggest beneficiaries are expected to be members with lower pensionable salaries and shorter contributory service, according to an ET report.
Why many pensioners are watching this closely
For several EPS members, the pension calculated under the formula remains below Rs 1,000. They currently receive Rs 1,000 only because of the minimum pension guarantee. If this floor is raised, their monthly income could automatically increase.
Who gets EPS pension?
Employees who contributed to EPS and completed at least 10 years of eligible service generally qualify for pension benefits. EPS contributions are calculated on wages up to the ceiling of Rs 15,000 per month, according to an ET report.Some higher-pension members who opted under earlier rules may already receive substantially higher pensions and may not benefit unless the increase is significant.
How EPS pension is worked out
Monthly pension = (Pensionable salary × Pensionable service) ÷ 70Those completing 20 years or more of service get an additional two-year weightage in pensionable service.
If salary was Rs 15,000, what pension is payable?
Average basic payService yearsMonthly pensionRs 15,00010Rs 2,142.9Rs 15,00015Rs 3,214.3Rs 15,00020Rs 4,714.3Rs 15,00025Rs 5,785.7Rs 15,00030Rs 6,857.1This means members already receiving above the revised minimum level may not gain from a smaller hike.
Who benefits under current Rs 1,000 minimum pension?
Average basic payService yearsCalculated pensionGets Rs 1,000 minimum?Rs 5,00010Rs 714.3YesRs 5,50010Rs 785.7YesRs 6,00010Rs 857.1YesRs 6,50010Rs 928.6YesRs 7,00010Rs 1,000NoRs 7,50010Rs 1,071.4NoSo members below roughly Rs 7,000 average pensionable pay are protected by the current floor.
If minimum pension rises to Rs 1,500
Average basic payService yearsPensionBenefit?Rs 10,00010Rs 1,429YesRs 11,00010Rs 1,571NoRs 12,00010Rs 1,714NoRs 13,00010Rs 1,857NoRs 14,00010Rs 2,000NoRs 15,00010Rs 2,143No
If minimum pension rises to Rs 2,000
Average basic payService yearsPensionBenefit?Rs 10,00010Rs 1,429YesRs 11,00010Rs 1,571YesRs 12,00010Rs 1,714YesRs 13,00010Rs 1,857YesRs 14,00010Rs 2,000NoRs 15,00010Rs 2,143No
If minimum pension rises to Rs 2,500
Average basic payService yearsPensionBenefit?Rs 10,00012Rs 1,714YesRs 11,00012Rs 1,886YesRs 12,00012Rs 2,057YesRs 13,00012Rs 2,229YesRs 14,00012Rs 2,400YesRs 15,00012Rs 2,571No
If minimum pension rises to Rs 3,000
Average basic payService yearsPensionBenefit?Rs 10,00014Rs 2,000YesRs 11,00014Rs 2,200YesRs 12,00014Rs 2,400YesRs 13,00014Rs 2,600YesRs 14,00014Rs 2,800YesRs 15,00014Rs 3,000No
What this means for pensioners
Any increase in the minimum EPS pension is likely to favour retirees with lower salaries and service periods closer to the 10-year eligibility mark. Those already receiving higher monthly pensions may not see much change unless the final revision is much larger.