A long-standing demand of EPFO pensioners may soon see progress, as the labour ministry is reportedly examining a revision in the minimum monthly pension under the Employees' Pension Scheme (EPS-95). Currently, the guaranteed pension stands at Rs 1,000 per month, and any upward revision could bring significant relief to lakhs of retirees who receive low payouts.
Possible Revision Scenarios
No official figure has been announced yet. However, if the minimum pension is revised to Rs 1,500, Rs 2,000, Rs 2,500, or Rs 3,000, the biggest beneficiaries are expected to be members with lower pensionable salaries and shorter contributory service, according to an ET report.
Why Many Pensioners Are Watching This Closely
For several EPS members, the pension calculated under the formula remains below Rs 1,000. They currently receive Rs 1,000 only because of the minimum pension guarantee. If this floor is raised, their monthly income could automatically increase.
Who Gets EPS Pension?
Employees who contributed to EPS and completed at least 10 years of eligible service generally qualify for pension benefits. EPS contributions are calculated on wages up to the ceiling of Rs 15,000 per month, according to an ET report. Some higher-pension members who opted under earlier rules may already receive substantially higher pensions and may not benefit unless the increase is significant.
How EPS Pension Is Calculated
Monthly pension = (Pensionable salary × Pensionable service) ÷ 70. Those completing 20 years or more of service get an additional two-year weightage in pensionable service.
Example: If Salary Was Rs 15,000
- 10 years of service: Rs 2,142.9 per month
- 15 years: Rs 3,214.3
- 20 years: Rs 4,714.3
- 25 years: Rs 5,785.7
- 30 years: Rs 6,857.1
This means members already receiving above the revised minimum level may not gain from a smaller hike.
Who Benefits Under Current Rs 1,000 Minimum Pension?
- Average basic pay Rs 5,000, 10 years: Calculated pension Rs 714.3, gets minimum? Yes
- Rs 5,500, 10 years: Rs 785.7, Yes
- Rs 6,000, 10 years: Rs 857.1, Yes
- Rs 6,500, 10 years: Rs 928.6, Yes
- Rs 7,000, 10 years: Rs 1,000, No
- Rs 7,500, 10 years: Rs 1,071.4, No
So members below roughly Rs 7,000 average pensionable pay are protected by the current floor.
Impact of Different Minimum Pension Levels
If Minimum Pension Rises to Rs 1,500
- Average basic pay Rs 10,000, 10 years: Pension Rs 1,429, benefits? Yes
- Rs 11,000: Rs 1,571, No
- Rs 12,000: Rs 1,714, No
- Rs 13,000: Rs 1,857, No
- Rs 14,000: Rs 2,000, No
- Rs 15,000: Rs 2,143, No
If Minimum Pension Rises to Rs 2,000
- Rs 10,000: Rs 1,429, Yes
- Rs 11,000: Rs 1,571, Yes
- Rs 12,000: Rs 1,714, Yes
- Rs 13,000: Rs 1,857, Yes
- Rs 14,000: Rs 2,000, No
- Rs 15,000: Rs 2,143, No
If Minimum Pension Rises to Rs 2,500
- Rs 10,000, 12 years: Rs 1,714, Yes
- Rs 11,000: Rs 1,886, Yes
- Rs 12,000: Rs 2,057, Yes
- Rs 13,000: Rs 2,229, Yes
- Rs 14,000: Rs 2,400, Yes
- Rs 15,000: Rs 2,571, No
If Minimum Pension Rises to Rs 3,000
- Rs 10,000, 14 years: Rs 2,000, Yes
- Rs 11,000: Rs 2,200, Yes
- Rs 12,000: Rs 2,400, Yes
- Rs 13,000: Rs 2,600, Yes
- Rs 14,000: Rs 2,800, Yes
- Rs 15,000: Rs 3,000, No
What This Means for Pensioners
Any increase in the minimum EPS pension is likely to favour retirees with lower salaries and service periods closer to the 10-year eligibility mark. Those already receiving higher monthly pensions may not see much change unless the final revision is much larger.
