NEWS HIGHLIGHT
Theme : Schemes for vulnerable sections of society and performance and issues associated with these schemes etc
Paper:GS-1 and GS-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.
TABLE OF CONTENT
- Context
- Elderly
- Challenges with Old Age
- Employees’ Pension Scheme (EPS)
- Current Issue
- Background
- Road Ahead
Context : 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.
Elderly :
- 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.
Challenges 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.
Health:
- 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.
Current Issue :
- Circular by Employees’ Provident Fund Organisation (EPFO): The circular covers only a segment of pensioners-subject to certain conditions.
Background :
- 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.
Road Ahead :
- 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.
FAQs :
-
Who can be termed as Elderly?
ANS.
- 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.
-
What is the Employee's Pension Scheme (EPS)?
ANS.
- It is a social security scheme provided by the Employees’ Provident Fund Organisation (EPFO).
- The scheme was first launched in 1995.