Govt Urged to Implement Higher EPFO Pension Scheme: Key Details

N K Premachandran, Member of Parliament from Kollam, has called for the immediate implementation of the higher EPFO pension scheme as mandated by the Supreme Court. Raising the issue during Zero Hour in the Lok Sabha, Premachandran emphasized the need to expedite the process, ensuring eligible employees under the Employee Pension Scheme 1995 (EPS-95) receive their rightful benefits.

Supreme Court Ruling on Higher Pensions

The demand for higher pensions stems from the Supreme Court’s ruling on November 4, 2022, which allowed existing employees to opt for a higher pension under EPS-95. Despite this landmark decision, progress has been slow. Out of 17,48,775 applications for higher pensions received by the Employees’ Provident Fund Organisation (EPFO) as of August 7, 2024, only 8,401 subscribers have been granted enhanced pensions.

Premachandran urged the government to act promptly, stating, “Employees are entitled to a higher pension under EPS-95, and this should be implemented without further delay.”

What Is EPS-95?

Introduced on November 19, 1995, the Employees’ Pension Scheme (EPS-95) is a social security initiative managed by the EPFO. It aims to provide financial stability to employees in the organized sector after retirement.

Key Features of EPS-95:

• Eligibility: Employees who have contributed to EPF for at least 10 years and are aged 58 or above are eligible for pension benefits.
• Contributions:
  • Employees contribute 12% of their basic salary and dearness allowance to EPF.
  • Employers match this contribution, with 8.33% directed toward EPS.
• Benefits: The scheme guarantees a fixed monthly pension based on a specific formula.
• Higher Pension Option: Employees earning above the EPFO wage ceiling can opt for a higher pension by contributing a greater percentage of their salary.

The Need for Faster Implementation

Premachandran criticized the delay in processing higher pension applications, which has left many eligible employees waiting for their enhanced benefits. The MP also highlighted concerns about pension calculation methods and urged the government to revisit and revise these calculations to ensure fairness.

“The government must prioritize this issue and implement the enhanced pension scheme immediately,” he said, emphasizing the importance of ensuring social security for retired employees.

Steps Taken So Far

The government has made some strides in bringing VDAs under regulation:

1. The Supreme Court ruling allows employees earning above the EPFO wage ceiling to opt for a higher pension.
2. EPS-95 contributions have been aligned to support higher pension claims.
3. Measures under the Prevention of Money Laundering Act (PMLA) have expanded the scheme’s transparency.

However, the slow implementation rate highlights the need for more robust execution mechanisms.

EPS-95: A Lifeline for Employees

The Employees’ Pension Scheme 1995 remains a cornerstone of India’s social security framework, providing retirement benefits to millions of organized sector employees. With the Supreme Court’s decision, employees now have the opportunity to opt for higher pensions, ensuring financial stability post-retirement.

Premachandran’s call to action underscores the importance of timely execution, stating, “The scheme’s benefits must reach employees at the earliest to ensure their welfare.”

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