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Govt may double minimum pension for organized sector employees

Livemint logoLivemint 25-06-2018 Prashant K. Nanda
A trader counts new 2,000-rupee notes at a wholesale vegetable market in Bangalore, India, Friday, Dec. 30, 2016. India yanked most of its currency bills from circulation without warning, delivering a jolt to the country's high-performing economy and leaving countless citizens scrambling for cash. Still, as Friday's deadline for depositing old 500- and 1,000-rupee notes draws to a close, Prime Minister Narendra Modi's government has called the demonetization drive a great success in drawing out tax dodgers and eliminating graft. © AP A trader counts new 2,000-rupee notes at a wholesale vegetable market in Bangalore, India, Friday, Dec. 30, 2016. India yanked most of its currency bills from circulation without warning, delivering a jolt to the country's high-performing economy and leaving countless citizens scrambling for cash. Still, as Friday's deadline for depositing old 500- and 1,000-rupee notes draws to a close, Prime Minister Narendra Modi's government has called the demonetization drive a great success in drawing out tax dodgers and eliminating graft.

New Delhi: The Union government is considering doubling, or even trebling, the minimum monthly pension for retired organized sector employees, said at least three officials familiar with the development. The move, if implemented, could benefit lakhs of pensioners, but it would also cost the government a sizeable additional expense.

A three-member committee, constituted by the labour ministry three months ago, is of the opinion that the existing pension of ₹ 1,000 per month is too low. Though a final decision is yet to be taken, there is a strong view that worker’s minimum pension needs to go up.

“We have discussed that the minimum pension should be between ₹ 2,000 to ₹ 5,000 instead of the present ₹ 1,000,” said Ravi Wig, one of the members of the labour ministry-constituted committee on pension.

“The committee has suggested that the government should immediately announce ₹ 2,000 as minimum pension. The further enhancement up to ₹ 5,000 can be debated and arrived at over time. The government has a responsibility and, I think, the poor workers should be provided with an enhanced pension,” said Wig, who is also a central board member of the Employees Provident Fund Organisation, or EPFO.

Wig said the existing pension is inadequate to even take care of the food costs of an employee. He said a daily pension of ₹ 33 is of little help even to a pensioner living in rural areas. He said the previous additional secretary of the labour ministry heading the committee has been promoted as the secretary, labour and employment, and he is hopeful that the ministry will take a view on the issue sooner than later.

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The executive committee and the central board of the EPFO, which runs the pension scheme, is expected to brainstorm the way forward on Monday and Tuesday, a labour ministry official said, requesting anonymity.

A labour ministry spokesperson, however, said he was not aware of any detail of the development.

Prabhakar Banasure, a central board member of the EPFO, said that he is expecting a detailed discussion on pension during the subsequent meetings this week. Low-waged employees need a bit of handholding by the government and the government must take a quick call on enhancing minimum pension, he said.

Every month, an organized sector employee contributes 12% of his basic salary and HRA to EPFO as provident deduction, and a similar amount is contributed by the employer. From the employer’s 12% contribution, 8.33% goes to employees’ pension scheme and the rest to the provident fund. As of now EPF contribution is mandatory for employees earning a monthly salary up to ₹ 15,000 in companies and establishments with 20 or more workers on its roll. EPFO has an active subscribers base of a little over 55 million.

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(Video provided by NDTV)

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