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The Labour Ministry has sent a proposal to the Finance Ministry to fix minimum pension of EPFO subscribers at Rs1,000 per month, irrespective of their contribution towards the scheme
New Delhi: Subscribers of the retirement fund body Employees Provident Fund Organisation (EPFO) may soon get a minimum monthly pension of Rs1,000 after superannuation, if a proposal in this regard is cleared by the Finance Ministry, reports PTI.
"Labour Ministry has recently sent a proposal to the Finance Ministry to fix minimum pension to the EPFO subscribers at Rs1,000, no matter what their contribution is towards the scheme," a source privy to the development said.
On the recommendations of the EPFO, the Labour Ministry has proposed to the Finance Ministry to either withdraw the two year bonus given to subscribers on completion of 20 years of service or bear additional burden of Rs539 crore every year for fixing minimum pension of Rs1,000.
At present every subscribers who completes 20 years of service is given benefit of additional two year bonus while tabulating his or her pension.
According the the EPFO, if this two year bonus is withdrawn, the exercise of fixing minimum pension at Rs1,000 would be a revenue neutral exercise besides pensioners getting about 5% relief.
However, if the Finance Ministry does not go for this alternative, the government would have to shell out Rs539 crore every year in addition to its existing payout of Rs994 crore annually for contributing 1.16% of basic pay and DA to the pension fund.
According to data, as on March 2010, there were 35 lakh EPFO pensioners of which 14 lakh get a monthly pension of less than Rs500.
The number of EPFO pensioners getting a monthly pension of Rs1,000 is seven lakh. The data reveals there are cases where pensioners are getting a monthly pension as low as Rs12 and Rs38.