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The Committee of Secretaries for proposing funding options to raise minimum pension to Rs 1,000 per month wants the Government to finance it and has calculated a one-time provision of Rs 14,000 crore that the Finance Ministry needs to make.
Alternatively, the Finance Ministry could make an annual allocation of about Rs 2,000 crore to provide for the additional outgo that is expected to benefit more than two million retired employees.
The CoS is expected to meet shortly to finalise the proposal provided the Finance Ministry agrees to it, an Employees’ Provident Fund Organisation official told Business Line .
As per the Employees’ Pension Scheme, employers contribute 8.33 per cent of an employee’s basic salary, subject to a maximum of Rs 541 a month, towards pension, while the Centre contributes 1.16 per cent of it. An extra contribution of 0.63 per cent of basic wages has to be made towards the Employee Pension Scheme if the minimum pension is to be increased to Rs 1,000 per month.
The UPA Government, with an eye on the forthcoming general elections, is keen to get the proposal implemented soon. However, with neither the Finance Ministry, nor the workers or employers willing to pitch in, a decision has been elusive so far.
Last November, the Labour Ministry had moved a Cabinet note proposing that the financial burden be shared equally between the Government, employers and employees. It could also be passed on to the employees by taking away the bonus that subscribers get after 20 years.
The CoS, comprising Secretaries from ministries including Labour & Employment, Finance, Micro, Small & Medium Enterprises and Industry, was then asked to come up with a workable solution.
“The CoS is of the opinion that the Government should take on the burden for the guaranteed pension as the employers and employees have both refused to contribute,” the official said.
Under the Employees’ Pension Scheme, about 1.28 million pensioners get a monthly annuity of less than Rs 500 while about 1.5 million get between Rs 500 and Rs 1,000. Only 7,30,000 pensioners draw a pension of more than Rs 1,000 a month.
“A meeting of the CoS was scheduled on April 4, but has now been postponed. We are hoping that the next meeting will be scheduled soon. It is indeed a pity that there are some pensioners who are actually drawing as less as Rs 12 per month and the situation has to be rectified,” the official added.
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