EPFO may fix minimum pension at Rs 1,000
"The CBT will take a call on the proposal to fix minimum pension at Rs 1,000 per month for its subscribers in a meeting scheduled on February 22," a source said.
The meeting of CBT, the apex decision making body of the Employees` Provident Fund Organisation`s (EPFO) had earlier in December deferred the decision on the matter. Although the agenda for the meeting is yet to be finalised, sources said, the issue would come up for discussion.
According to EPFO data, as of March 31, 2010, there are 35 lakh pensioners subscribed to the retirement fund body, of which 14 lakh persons get a monthly pension of less than Rs 500. The number of EPFO pensioners getting a monthly pension of Rs 1,000 is 7 lakh. The data reveals that there are cases where pensioners are getting a monthly pension as low as Rs 12 and Rs 38.
Although representatives of employers and employees have agreed on fixing the minimum pension at Rs 1,000 per month, there is no decision on the means of raising the additional fund requirement.
As per estimates, the decision will require an additional contribution of 0.63 per cent of subscribers` basic pay and dearness allowance. The hike in contribution will be over-and-above the 8.33 per cent contributed by employers toward the pension account of employees, as well as the 1.16 per cent provided by the government under the scheme.
If the government decides to bear the extra cost, then an amendment to the Employees` Pension Scheme (EPS) would be needed. "It is possible that trustees may decide on sharing of additional burden equally by government, employees and employers," a trustee said. Furthermore, the CBT is likely to discuss the proposal to issue passbooks to subscribers on the lines of banking services.
At present, the employers are required to maintain record of contribution made by them and their employees with monthly updates. EPFO has planned to issue these `Contribution Cards` to subscribers from April 1, 2012. The EPFO has subscriber base of over 4.71 crore and manages a corpus of Rs 3.5 lakh crore.