Friday, May 25, 2012

EPFO defers decision on minimum monthly pension of Rs 1,000

The Economic Times


EPFO defers decision on minimum monthly pension of Rs 1,000

NEW DELHI: The government yet again deferred a decision on raising minimum pension for organised sector employees to Rs 1,000 per month as the labour ministry struggled to persuade workers, employers and the finance ministry to share the financial burden.

The Central Board of Trustees, the key policy making body for the employees provident fund organisation or the EPFO, which met on Friday, also deferred a decision on approval sought by Reliance Capital Asset Management for proposed acquisition of 26% of its equity stake by Nippon life insurance company of Japan.

"We have requested employers, employees and the government - all three together (that) if they contribute a small amount each, that will solve the problem," labour minister Mallikarjun Kharge told reporters.

The EPFO's suggestion that employees either sacrifice the bonus they get if they remain a subscriber for 20 years or allow eligibility age for pension to be raised from the current 58 years to 60 years to fund the proposal was rejected by trade unions.

"Trade unions opposed the proposal as it would put the entire burden of funding the increase in minimum pension on workers," said AITUC secretary D L Sachdev.

As per calculations by an expert committee on pensions, a hike to the tune of 0.63% of basic wages in total contribution to EPS is required in addition to present contribution of 8.33% by employers' and 1.16% by the Centre to fund the increase in minimum pension.

Of total 35 lakh pensioners in the country, about 12.8 lakh get less than Rs 500 per month while about 15 lakh get pension ranging between Rs 500 and Rs 1,000. Only about 7.3 lakh of pensioners get a pension of more than Rs 1,000.

Kharge said he had already asked the finance ministry to contribute and would continue the discussion in order to speed up a decision on the issue. "We are working out some proposal and we will put it before the government," Kharge said.

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