The long-running demand to increase the minimum pension under the Employees’ Pension Scheme (EPS), 1995 has once again come under the spotlight. Amid rising inflation and growing concerns over the financial well-being of retirees, the government has clarified that there is currently no separate proposal or fixed timeline to raise the minimum EPS pension from Rs 1,000 to Rs 7,500.
Responding to questions in the Rajya Sabha, the Ministry of Labour and Employment reiterated that any revision in pension payouts must take into account the long-term financial sustainability of the Employees’ Pension Fund, reported The Financial Express.
What Triggered The Fresh Debate?
The issue was raised by Rajya Sabha MP Dr Medha Vishram Kulkarni, who flagged the financial strain faced by EPS-95 pensioners, particularly in Maharashtra. She highlighted that lakhs of pensioners have been demanding an increase in the minimum monthly pension from Rs 1,000 to Rs 7,500, arguing that the existing amount is inadequate given current cost-of-living pressures.
Dr Kulkarni sought clarity on whether the government had received representations from Maharashtra-based employee unions and pensioners’ associations during 2025.
She also asked whether any actuarial study had been conducted specifically for pensioners in the state and whether the Centre had a timeline in mind to revise the pension while safeguarding the scheme’s financial health.
How The EPS-95 Scheme Works
In her reply, Minister of State for Labour and Employment Sushri Shobha Karandlaje explained the structure of the Employees’ Pension Scheme, 1995.
She described EPS as a contribution-defined benefit social security scheme. The pension corpus is built from two primary sources: an employer contribution of 8.33 per cent of wages and a 1.16 per cent contribution by the Central Government on wages up to Rs 15,000 per month. All pension payments under EPS-95 are made from this pooled fund.
The minister also clarified that the government currently supports a minimum pension of Rs 1,000 per month through budgetary assistance. This support is in addition to the Centre’s 1.16 per cent wage contribution routed through the Employees’ Provident Fund Organisation (EPFO).
Sustainability Remains The Core Concern
A key element of the government’s response centred on financial viability. The minister noted that the pension fund undergoes annual valuation as mandated under Paragraph 32 of EPS, 1995. This actuarial exercise assesses whether projected contributions into the fund are sufficient to meet future pension liabilities.
She underlined that while the government remains committed to strengthening social security through the EPF Scheme, 1952, EPS-95 and the Employees’ Deposit Linked Insurance (EDLI) scheme, decisions on pension enhancement must carefully balance current demands with long-term obligations.
In effect, the Centre signalled that sustainability considerations, rather than political timelines, will guide any future revision.
No State-Wise Pension Fund
The Labour Ministry acknowledged that representations have been received from various stakeholders seeking a higher minimum pension. However, it clarified that there is no separate state-wise pension corpus under EPS-95.
This means demands raised in Maharashtra or any other state are evaluated at the national level. Since the fund is centrally pooled, any revision would apply uniformly across the country.
A Long-Standing Demand From Pensioners
Calls to raise the minimum EPS pension are not new. Trade unions and pensioners’ associations have for years urged the government to revise the Rs 1,000 benchmark, which was fixed more than a decade ago. With inflation eroding purchasing power and healthcare costs rising for senior citizens, the issue has repeatedly surfaced in parliamentary discussions.
Despite assurances that the matter remains under consideration, the Centre has consistently maintained that an increase must be financially feasible.
Wider EPFO Reform: Wage Ceiling Under Review
Parallel to the pension debate is another development that could reshape EPFO coverage. The government is reportedly considering raising the wage ceiling for mandatory EPF and EPS contributions from Rs 15,000 to Rs 25,000.
The current threshold was set roughly 12 years ago. If revised upward, a larger segment of organised sector employees would come under the mandatory social security net. Over time, this could strengthen provident fund accumulations and pension coverage, potentially improving the scheme’s financial base.
However, any such reform would also require careful actuarial evaluation to ensure that expanded coverage does not strain the fund.
For now, the parliamentary reply makes the government’s position clear: while the demand to raise the minimum EPS pension to Rs 7,500 has been acknowledged, there is no separate proposal or timeline in place.
