EPFO Minimum Pension Hike: Will Govt Approve ₹7,500 Minimum Pension Demand?
Private sector employees under the Employees’ Provident Fund Organisation (EPFO) have long awaited an increase in the minimum pension, which has remained stagnant at ₹1,000 per month since 2014. With rising inflation and increasing living costs, pensioners and advocacy groups are pushing for a significant hike, demanding a minimum pension of ₹7,500 per month along with dearness allowance (DA) benefits.
Current Pension System and Contributions
Under the existing framework, EPF members contribute 12% of their basic salary towards the provident fund, with employers matching this contribution. Out of the employer’s share, 8.33% is allocated to the Employees’ Pension Scheme (EPS), while the remaining 3.67% goes to the EPF scheme. Despite this structure, the minimum pension has not been revised in nearly a decade, leaving retirees struggling to meet their financial needs.
EPS-95 Pensioners’ Demand for ₹7,500 Minimum Pension
Ahead of Budget 2025, a delegation of EPS-95 retirees met with Finance Minister Nirmala Sitharaman to advocate for their long-standing demand of a minimum pension of ₹7,500 per month plus DA. The EPS-95 National Agitation Committee reported that the finance minister assured them their demands would be considered sympathetically.
Pensioners have been campaigning for over seven to eight years, highlighting the inadequacy of the current pension amount. In addition to the pension hike, they are also seeking DA benefits and free medical treatment for retirees and their spouses.
Upcoming EPFO CBT Meeting on February 28
The demand for a pension revision gains significance as the Central Board of Trustees (CBT) of EPFO is scheduled to meet on February 28, 2025. While the primary agenda of the meeting is to finalise the interest rate on provident fund deposits for FY 2024-25, the issue of pension enhancement is expected to be a key discussion point.
Pensioners and advocacy groups argue that the current ₹1,000 pension is insufficient, especially in light of rising inflation and escalating medical expenses. The outcome of the CBT meeting could determine the future of pension benefits for millions of employees.
Proposal for Fixed Interest Rate and Interest Stabilisation Fund
In a separate development, the central government is reportedly considering a proposal to introduce a fixed interest rate for EPFO subscribers. This move aims to provide stable returns regardless of market fluctuations, ensuring financial security for subscribers.
Additionally, the government is exploring the creation of an interest stabilisation reserve fund to maintain a steady interest rate, irrespective of investment performance. The proposal is in its early stages, with the Ministry of Labour and Employment conducting an internal study to assess its feasibility.
Potential Revision of EPFO Interest Rate for 2024-25
Media reports suggest that the EPFO may revise the interest rate for provident fund deposits for 2024-25. The rate is expected to be set between 8% and 8.25%, consistent with the previous financial year (2023-24).
The CBT, chaired by the Union Minister for Labour and Employment, is EPFO’s highest decision-making body. It comprises representatives from employer associations, trade unions, and government officials. The interest rate proposal follows a structured approval process:
1. EPFO proposes the rate
2. CBT reviews and approves it
3. Finance Ministry grants final clearance
4. Approved interest is credited to subscribers’ accounts
EPFO Interest Rate in Previous Years
For FY 2023-24, the EPFO set the interest rate at 8.25%, up from 8.15% in 2022-23. The upcoming CBT meeting will decide whether the interest rate remains unchanged or is further increased.
The February 28 CBT meeting holds immense importance for millions of EPFO subscribers. Key decisions on pension revision, interest rate stability, and potential rate adjustments will have far-reaching implications for both pensioners and active employees. As stakeholders await the outcome, the focus remains on ensuring better financial security for retirees and stable returns for provident fund contributors.
*Disclaimer: This article is for educational purposes only. The securities and examples mentioned are not recommendations. It does not constitute personal investment advice or aim to influence investment decisions. Readers are advised to consult financial experts before making any investment choices.