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Union Government releases Rs 2,000 crore for Employees’ Pension Scheme

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Background

  • The Central Government had increased the minimum pension under the Employee’s Pension scheme to INR 1,000 per month, since September 2014. However, this provision was to be continued only till March, 2015. On 1st April, 2015, EPFO (Employee Provident Fund Organisation) had to suspend the scheme, owing to a lack of directive from the Government about the continuance of the scheme.
  • The government gave a new life to the scheme towards the end of April, by deciding to continue the scheme in perpetuity, thus benefitting over 28 lakh pensioners, which include about five lakh widows, under the social sector scheme (EPS-1995) run by EPFO.
  • The Union Budget promised to grant a continuous support of INR 850 crores for the financial year 2015-16 to ensure the continuance of the minimum pension amount.
  • The reason for a hike in the minimum pension amount was the low pension amounts being disbursed, in the face of increased cost of living.
  • The Government contributes 1.16% of the employee’s salary towards EPS, while the Employer contributes 8.33% of the monthly wages of the members of the scheme, as per the rules under the Employee’s Provident Funds and Miscellaneous Provisions Act, 1952.
  • EPFO is a statutory body under Ministry of State for Labour and Employment.

Rs. 2000 crore released

  • The INR 2,000 crore was released by the Union Government as its contribution for the year 2015-16, towards the Employee’s Pension Scheme. This was in addition to the grant-in-aid of INR 250 crore already released by the Centre for providing a minimum pension of Rs. 1,000 to EPS, 1995.
  • The additional grant was necessary to ensure and sustain continuance of the minimum pension.