General Studies Paper 2
- 70 lakh pensioners are still waiting for higher pension under the Employees’ Pension Scheme (EPS), 1995. The Supreme Court reiterated, as a matter of principle, its approval of the idea of higher pension.
- The National Elderly Policy defines people in the 60+ age group as elderly.
- According to the Population Census 2011, there are nearly 104 million elderly persons in India.
Problems associated with old age:
- Social: The traditional values and institutions are in the process of erosion and adaptation.
- Financial: Retirement and dependence of elderly on their child for basic necessity.
- Multiple disabilities among the elders in old age.
- Among persons aged 60 and above, 30% to 50% (depending on gender and age group) had symptoms that make them likely to be
Employees’ Pension Scheme (EPS):
- It is a social security scheme provided by the Employees’ Provident Fund Organisation (EPFO).
- The scheme was first launched in 1995.
- It makes provisions for pensions for the employees in the organized sector after the retirement at the age of 58 years.
- Employees who are members of EPF automatically become members of EPS.
- Both employer and employee contribute 12% of employee’s monthly salary (basic wages plus dearness allowance) to the Employees’ Provident Fund (EPF) scheme.
- EPF scheme is mandatory for employees who draw a basic wage of Rs. 15,000 per month.
- Of the employer’s share of 12 %, 8.33(eight point three three)% is diverted towards the EPS.
- Central Govt. also contributes 1.16(one point one six)%of employees’ monthly salary.
What is the current Issue?
- Circular by Employees’ Provident Fund Organisation (EPFO): The circular covers only a segment of pensioners-subject to certain conditions.
- In 2005: Section of Himachal Pradesh Tourism Development Corporation staff demanded higher pension.
- The employer had made the 12% mandatory contributions on their actual pay, which exceeded the statutory ceiling
- entitled to the benefit of the deposit of 8.33(eight point three three)% of their actual salary in the Pension Fund.
- Employees along with their employer did not exercise their option within the cut-off date.
- In 2016: Court rejected the EPFO’s notion of a cutoff date.
- It held that the cut-off date, as in the EPS rules, was meant to calculate the pensionable salary only.
Conditions imposed by circular of EPFO:
- Payment of contributions on higher or actual wages
- Exercise of joint option while in service
- Refusal by the EPFO to allow higher pension.
Reason for reluctance by PF authorities:
- Apprehension over the sustainability of the pension fund
- Those receiving lower pension have to cross-subsidise pension payouts for those getting or likely to get a higher pension.
- Factors such as:
- rising actuarial shortfall, lower rate of returns and increasing longevity of pensioners may lead to the situation of pension payouts outstripping receipts.
- According to the EPFO: It will go against social security.
Initiatives by government for elderly:
- PM Vaya Vandana Yojana
- Indira Gandhi National Old Age Pension Scheme
- Rashtriya Vayoshri Yojana
- Vayoshreshta Samman
- Varishth Pension Bima Yojana
- Integrated Programmes for older persons
- Much of the confusion among pensioners could have been avoided had they been proactive in sharing information or explaining the position to those concerned.
- On the policy front: The Government and the EPFO should increase the minimum monthly pension of ₹3,000 against the existing ₹1,000.
- It will address the grievances of pensioners who were in the lower wage bracket.
- EPFO can give a one-time opportunity to all those in the higher wage group who retired in Dec 2004 without exercising the option.
- Government should substantially increase its financial support.
- Code on Social Security, 2020: It can have a scheme for those youngsters who have got jobs after September 2014 who have been left out of the EPS on account of their higher wages.