Finmin junks appeal to double minimum EPS pension

• Follow

Following the order of the Supreme Court last year paving the way for higher pensions for its subscribers, the Employees’ Provident Fund Organisation (EPFO) has decided to establish an actuarial department in-house, The Economic Times has reported. Accordingly, the social security organisation would employ new staff to enable it to discharge the new responsibility.

“There is an urgent need to have an in-house actuarial set up also. The details for the set up are currently being explored,” read an item on the agenda document of the EPFO, the report claimed.

It also stated that the organisation might request the exempted establishments to cough up administrative charges that computing and processing of higher pension for the employees might entail.

These were some of the proposals that the EPFO’s central board of trustees deliberated on February 10, when they met.

To calculate the financial impact of the apex court order for higher pension, the EPFO has appointed an actuary. However, the body thinks it would need the service of an actuary on a long-term basis since a huge number of members are still working and they have opted for higher pension.

“As such, the work related to pension on higher wages shall be continuing in the future. Therefore, there is a need for separate staff for pension work in the head office as well as those field offices where a large number of applications have been received,” said the EPFO.

Till December 15 as many as 17.4 lakh applications requesting higher pension from pensioners and existing members for validation of option or joint option flooded the EPFO. The report stated that 11.7 lakh applications are still pending with the organisation which has issued demand letters to 42,164 applicants.

The number of applications that have been turned down amount to 22,703. More than 72% of these applications were from pensioners who retired before September 1, 2014, which is the cut-off date set by the apex court for higher pension.

But why would it attempt to pass on the administrative cost to exempted establishments? In what would appear to be a rationale, the EPFO said about 52% of the workload for higher wage cases would relate to exempted establishments.

It might be mentioned that some companies have set up their own provident fund trusts to manage contributions from the employees. They don’t submit the funds to the EPFO and, therefore, the term exempted establishments. There are nearly 1,400 organisations in the country that are in this category and some of these are big businesses.

“The administrative cost of pension-related work is met from the administrative charges paid by unexempted establishments while the exempted establishments pay only inspection charges that are much less compared to the work involved for them, said the EPFO.

According to the EPFO, the application of higher pension from exempted establishments would be decided on the Trust Rules approved by the appropriate government. These could differ between different exempted establishments and, therefore, inspection and processing of these applications would necessitate more effort and resources.

Meanwhile, the Business Standard has reported that the Union finance ministry has declined to entertain a proposal of the labour ministry to double the monthly minimum pension to Rs 2,000 under the Employee Pension Scheme (EPS).

“According to the recommendations made by a highly-empowered monitoring committee constituted by the government, a proposal to increase the minimum pension under EPS from Rs 1,000 to Rs 2,000 per month, by providing additional budgetary support, was sent to he ministry of finance. The ministry of finance did not agree to it,” the newspaper stated quoting an official who preferred anonymity.

EPFO’s data show of the total number of pensioners of 75.5 lakh under the scheme, 36.4 lakh get pension of up to Rs 1,000/month. The number of pensioners who get an amount of Rs 1,000 and Rs 1,500/month is 11.7 lakh.

About 8.68 lakh pensioners are given Rs 1,501 and 2,000 per month, while merely 26,769 pensioners get more than Rs 5,000 every month.

Describing the monthly pension of Rs 1,000 as ‘grossly inadequate’, a Parliamentary Standing Committee on Labour urged the ministry to pressure the matter with the Union finance ministry to revise it higher. It happened in March 2022.