Labour Ministry shelves plan to double minimum pension - EPFO faces fund crunch

The government plan to double minimum pension for nearly 4.5 million pensioners of the Employees’ Provident Fund Organisation (EPFO) appears to have been shelved, as the Union labour and employment ministry has kept the plan in abeyance, for the time being, said a LiveMint report quoting officials. Notably, an internal panel of the retirement fund manager had recommended increasing the pension for EPFO subscribers from existing Rs 1,000 per month to Rs 2,000 per month, the report added. 

According to the report, out of 6 million pensioners under the EPFO, nearly 4.5 million receive less than Rs 2,000 per month, therefore increase in the pension amount would put the additional financial burden of Rs 1,500 crore annually on the government. Citing two constraints —one financial and timing of the year, the labour ministry reportedly took this decision.  

“This is now on hold. We cannot go ahead as it will burden us financially," one of the officials told Mint, while another official stated it's not possible to demand more funding because of election time. 

The report said that EPFO needs financial support to double the pension of those pensioners who are getting less than Rs 1,000. After announcing an 8.65% rate of interest for its 60 million subscribers in February for 2018-19,  the retirement fund body needs surplus fund go ahead, the report added

One of the officials further told the Mint that following the suggestion of the EPFO's internal empowered committee to double the pension amount, a cabinet note was also prepared, but the report was not made public.

Notably, a minimum pension of Rs 3,000 per month was announced for informal sector workers in the interim budget through the Pradhan Mantri Shram Yogi Maandhan (PMSYM) scheme, to benefits workers in the 18-40 age group.

Meanwhile, a labour ministry spokesperson refused to comment on the development.

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The report quoted Virjesh Upadhyay, a central board member of the EPFO and secretary general of the Bharatiya Mazdoor Sangh, as saying “Now it looks difficult. There is no intimation about any fresh central board of trustees (CBT) meeting taking place now," adding “Once the elections are over and a new government is in place, the CBT may convene to take call on key issues."