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The number of pensioners receiving government support to avail the minimum monthly pension of Rs 1,000 under the Employee Pension Scheme (EPS) is set to increase for a third year in a row in FY24, data gathered from the latest annual report of the labour ministry shows.
Experts attribute this increase in beneficiaries to the stagnation in wages of workers and high inflation, leading to lower contributions from subscribers, thus necessitating government contribution to even receive Rs 1,000 as a pension.
Data shows that the number of pensioners receiving government support is projected to have risen by nearly 4% to 2.13 million in FY24 from 2.05 million in FY23. In terms of share, the number of pensioners receiving support stood at 27.3%, slightly up from 27.2% in the corresponding time period.
KR Shyam Sundar, adjunct professor, Management Development Institute, says that a large number of subscribers under the EPS are lowly paid, thus severely limiting their contributions towards their pension during their working age, making them dependent more on social capital rather than pension.
“EPS is a contributory scheme and the pension thus received is proportional. However, the stagnation in wages and an increase in inflation during a worker’s lifetime means that contributions are less, thus leaving a worker with very little corpus and little pension afterwards, which then has to be supplemented by the government funds,” he said.
In September 2014, the government gave effect to a long-awaited demand of workers’ unions for the implementation of a minimum pension under the Employees Provident Fund Organisation (EPFO), thus providing a minimum pension of Rs 1,000 per month for members, Rs 750 per month for orphan pensioners, and Rs 250 per month for children pensioners. Any shortfall in this amount is borne by the government.
The annual report data also shows that the amount paid by the government to implement the minimum pension provision is also projected to increase by 26% to Rs 1,223 crore in FY24 from Rs 970 crore in the previous financial year.
“With inflation inching up and the minimum pension being fixed almost a decade back, it is pertinent that the government budgets to revise the minimum pension upwards, as is being demanded by various quarters. This will not only help the health of elderly pensioners, it will also boost the consumption expenditure in the economy,” added Sundar.
Last week, the Chennai EPF Pensioners’ Welfare Association wrote to Union Labour Minister Mansukh Mandaviya advocating for an increase in the minimum monthly pension to Rs 9,000 for pensioners under the EPS, accompanied by dearness allowance. Similarly, a delegation of the EPS-95 National Agitation Committee met with senior officials of the EPFO last month to press for a minimum monthly pension of Rs 7,500.
Meanwhile, the total corpus under the EPS has nearly doubled to Rs 7.8 trillion at the end of FY23 from Rs 3.93 trillion in FY18 due to an increase in the membership of the social security organisation in recent years.
Source: Labour Ministry annual reports
* Projection
First Published: Sep 08 2024 | 5:50 PM IS
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