Govt. Push for Rs. 1,000 Monthly Pension Plan

The labour ministry has proposed a minimum pension of R1,000 a month for all those who subscribe to the Employees’ Pension Scheme (EPS). If implemented, the move will benefit nearly 3 million workers engaged in small and medium enterprises with higher retirement benefits.

Under the EPS 95 scheme, which has been in operation since 1995, a part of the employees’ provident fund contributions are set aside into a separate corpus which they can claim as pension after retirement, either as a lump sum or as a monthly payment.

The amended scheme, for which the labour ministry has moved a cabinet note, would imply that the Centre may have to subsidise the fund through a budgetary grant to raise the pension level for all those who, as per their contributions, are eligible for a much lower payout.

Alternatively, it may have to adopt a model of a rolling debt by which it pays new retirees by dipping into the pool of high-income savers who have several years to reach the age of superannuation.

Hindustan Times, New Delhi, 25-06-2012