E A S Sarma, former secretary to the government of India, drew the attention of the finance minister Smt Nirmala Sitharaman regarding the plight of 40 lakh workers who are getting a meagre sum as EPF pension.

In a letter dated 22-9-2020 he clarified to the union finance minister,

One of the sections of the people who seem to be in a helpless situation today in the context of the Covid19 crisis is that of 60 lakh pensioners under the EPS-95 managed by the Employees Provident Fund Organisation (EPFO). Out of this, 40 lakhs are getting less than Rs 1,500 per month and many getting less than Rs 1,000 per month. I understand that the minimum pension of Rs 1,000 has remained stagnant for more than five years, though the cost of living has increased steeply. This is the section that is vulnerable to increasing health problems. The situation in which they find themselves today is truly pitiable, calling for a review of the funding of the scheme and the need to entitle the pensioners to a minimum that is consistent with the right to live under Article 21 of the Constitution.

EPS-95 is partly funded by employees’ contributions. Therefore, a large portion of the minimum pension of Rs 1,000 is actually funded by the pensioner-employee himself/ herself. To that extent, it is a saving scheme. The difference between what the employee has contributed and what the employee on retirement should get to be able to live in dignity should be funded by the employer and the Government as a measure of social security. Some economists feel that the pension should at least be half of the minimum wage. Whatever be the principle, the amount of the pension should enable the pensioner to lead a dignified life.

There have been several expert committee reports on the subject and at least one Parliamentary Committee report. In fact the Rajya Sabha Committee on Petitions in its 147th Report dated 3-9-2013 considered a petition filed by Shri Prakash Javadekar (at present a Union Minister), then a Member of the Rajya Sabha seeking an amendment to the EPS-95 and recommended that the minimum pension should be enhanced to Rs 3,000 per month and indexed to the cost of living. Even based on this, the government should enhance the pension by adjusting Rs 3,000 in line with the increase in the cost of living since September, 2013 and adopt the approach recommended by that Committee hereafter.

On the basis of a pension linked to the minimum wage level and other cost-of-living arguments, the trade unions have been demanding a minimum pension of Rs 6,500 indexed to the cost of living and entitling the pensioners to ESI benefits to offset the increasing health costs. Perhaps, there is a strong case to consider that demand as it is meant to provide a social security cover to the aging pensioners. In any progressive society, the government has the obligation to accord the highest priority to such social security measures.

In any case, this is a matter on which the government cannot afford to delay its decision any further. I hope that your Ministry, in consultation with the Union Labour Ministry, takes an urgent decision to enhance the minimum pension as indicated above.

He further clarified his position in a letter sent to Smt Nirmala Sitharaman today,

More than 40 lakhs of employees covered by EPS-95 are getting a monthly pension of less than Rs 1500 and most of them are getting a monthly pension of less than Rs 1000 only. This works out to around Rs 33 per day, a figure that should make anyone with a conscience feel deeply concerned. This section of the population, like the workers in the unorganised sector, are also the ones hurt by COVID 19 crisis. They are highly vulnerable to the virus.

I understand that the government is currently contributing Rs 6,000 crore annually to the EPS pool. I understand further that the Parliamentary Standing Committee on Labour has asked the EPFO and the Labour Ministry at a recent meeting to examine the pattern of investment of the EPS funds vis a vis the returns earned, with a view to make sure that the pool is managed prudently. This calls for urgent action.

When BJP was in opposition in 2013, its leaders had demanded that the government should increase its contribution to the EPS pool and enhance the minimum EPS pension to Rs 3,000 per month. The logic that was applicable at that time should continue to be applicable today and, therefore, there is perhaps a strong case for indexing the monthly pension rate of Rs 3,000 in 2013 with reference to the subsequent rise in the cost index.

After all, the idea of a pension is to provide a reasonable succour to an employee post-retirement who had served the nation for a minimum period of time. Inflationary trends in the economy that have rendered the cost of living dearer are the result of shortcomings in fiscal management. The pensioners should not be penalised on account of such trends as they tend to erode the real value of the pension..

The usual reason cited by the government for not enhancing the EPS penion rate is that its fiscal position is tight and it cannot afford to put in a higher contribution to the pension pool. This may not hold water for a government that has had no hesitation whatsoever in opting to divert more than Rs 20,000 crores for the ambitious Central Vista project in Delhi and, earlier, spending more than Rs 3000 crores on the Statue of Unity in Gujarat! A smile on a pensioner’s face should mean much more in a country like ours than statues, and symbolic concrete structures.

May I once again appeal to you to consider enhancing the EPS pension rate to a reasonable level and index it to the rising cost index?


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