The philosophy behind pensions is to relieve post-retirement tension. But at the moment, it is a privilege enjoyed mainly by Central government and public sector employees.
The Employee Pension Scheme (EPS), launched in 1995 under the Employers’ Provident Funds and Miscellaneous Provisions Act, 1952, was a modest beginning to extend pension benefits to employees and workers in the private and semi-private sector.
That scheme, stuck in a time warp, was limited in its scope from the beginning. The pensionable salary as well as the maximum pension one could draw was pegged at Rs. 6,500 a month. A strong case has been made to raise the ceiling to Rs. 15,000.
The government contribution to the Pension Fund, the pool from which pensions are disbursed, is a paltry 1.16 per cent, as opposed to 8.33 per cent each from the employer and the employee.
BJP MP Prakash Javadekar, on whose initiative the Petitions Committee of the Rajya Sabha is examining proposals for some key modifications to the scheme, says the scheme provides for pension on retirement/disablement, withdrawal benefit, spouse pension, children pension, orphan pension, disabled child pension and dependent parent pension.
The nature of the dynamics of the scheme has led to a ludicrous situation. At present, 36 lakh retired employees get pension under EPS-95. Of this, 30 lakh get less than Rs.1,000 a month and 25 lakh get less than Rs.500.
A proposal to provide a minimum pension of Rs.1,000 a month under the Employees’ Pension Scheme, 1995, is under the government’s consideration, according to the Ministry of Labour and Employment.
Far from getting a pension that matches the minimum wage fixed by the State governments, the majority of retirees draw a sum well below the money disbursed under social welfare schemes such as old-age pension, SHG elder women and niradhar pension.
The majority of retired employees and workers are from small establishments such as medium-scale shops, petrol pumps, small offices, establishments and companies.
A minimum pension of Rs. 3,000 can be ensured if the government contribution is enhanced to 8.33 per cent (the burden to the exchequer will be Rs. 6,000 crore).
Another key demand of the retired employees and workers is that EPS-95 be indexed with inflation.
The Rajya Sabha Committee can also look at the rationale behind the pension ceiling, if individual employees are willing to contribute more to the fund.