Pension as a third retirement benefit in addition to the contributory Provident Fund and Gratuity was a long standing demand of the Industrial workers. The Government introduced a scheme by name Employees Pension Scheme (EPS 1995) w.e.f. 15th November 1995 replacing the existing Family Pension Scheme 1971 for the industrial workers through diverting a portion of the employer’s contribution to the Provident Fund thereby reducing the PF benefit of the employee to make provision for an insignificant amount towards retirement pension. There exist two types of Provident Fund and Pension schemes now in the country amongst whom there cannot be any comparison.

1) General Provident Fund for Central & State Government employees – Here the Government is not required to deposit any amount in the PF account. In exchange, the Government employees are in receipt of superannuation pension which is equivalent to 50% of the last drawn basic wage plus DA at the prevalent rate as applicable to the serving employees. There is provision of pension to the nominee in case of premature death of the employee or the pension holder. Off late the Government has brought about quite a number of changes in the scheme for the new entrants which the trade union movement is opposing tooth and nail.

2) Contributory Provident Fund governed by the PF Act 1952 for Industrial workers both in the Public and Private Sector – As per this Act deduction @ 12% (w.e.f. 22/07/1997, earlier it was 8.33%) of the total wage of an employee is compulsorily made and an equivalent amount is required to be deposited by the employer in the Fund managed by Employees’ Provident Fund Organization. Though there was a provision as per para 6(a) of the Act to formulate a pension scheme in due course, an optional Family Pension Scheme (FPS 1971) was only started during 1971 to arrange payment of some amount of pension to the nominee wife/husband of any employee dying in harness. Here an amount equivalent to 1.67 % of wages of an employee and a matching grant out of the Provident Fund contributions got diverted to the Pension Fund with a Government contribution of 1.16 % of the wage. There was provision of some withdrawal benefit after superannuation too. This scheme was withdrawn w.e.f. 15.11.1995 with the introduction of Employees Pension Scheme 1995 (EPS 1995) which was made compulsory for the FPS 1971 members. In the new scheme, 8.33% out of the employer’s contribution towards Provident Fund is required to be diverted to the Pension Fund with the remaining 3.67 % deposited in the PF account. The Government’s contribution to the Pension Fund continued to remain static at 1.16 % of the wage. Thus PF benefit was reduced substantially and at the cost of PF benefits provision for superannuation or widow and children pension was made. There was widespread resentment amongst the workers against the scheme though the trade union movement in the country was not united to fight the case.

A few independent unions who organized movement through out the country, several court cases were filed by various unions in different parts of the country all of which were brought to the Supreme Court for hearing. The hearings were completed by May 2001 but the judgment surprisingly remained undelivered for long 30 months. As per the proceedings of the case, examinations/cross examinations, records submitted by the Petitioners, the EPS 1995 was supposed to be scrapped or at least made optional. But it was not the desire of the Government and hence not of the Apex Court and the ruling were naturally in favour of Government.

EPS 1995 – where it stands after 14 years :-

• Though as per the scheme 8.33% of wage out of employers’ contribution towards Provident fund is to be diverted to the Pension Fund but factually there is an upper cap of monthly wage which stands at Rs.6500/- as of now. At this rate of contribution to Pension Fund what maximum pension a pensioner can get or what exactly is the amount of pension now being received by the retirees can be revealed from the examples given hereafter.

Example 1 – For getting the maximum pension one has to be a member of the scheme for 35 years. Effective from 15.11.1995 if a person remains in employment for 35 years as per the pension formula, , he will be entitled for maximum pension from December 2030 which would be = Rs.3250/- only. One can easily imagine what shall be the value of this small amount during 2030 and how a pensioner would be able to maintain his family then with this paltry amount.

Example 2 – With the advent of LPG regime, several thousand employees have lost their livelihood both in the private and in the public sector and the pension relief granted to them ranges between Rs. 265 & Rs.1200 only. Example 3 – And those who have just superannuated after 30/35 years of service say during 2005, the maximum pension they are getting is hardly Rs.2000/- a month.

This is what the real face of the much publicized social security for the industrial workers.

• Diversion of Rs.6500/- annually or say an amount of Rs 550/- per month from the employers’ contribution towards provident fund in the pension scheme for long 35 years, if deposited in a prevailing recurring deposit scheme, shall earn an amount of no less than 2.5 to 3 times the deposited amount. If that much of amount is then invested in a monthly income scheme the amount receivable would be much more than the maximum pension amount of Rs.3250/- per month with the entire deposited amount remaining intact. Government will however give an explanation that pension for premature death or permanent incapacitance of a member is also to be taken in mind. But statistics will confirm such cases are minimal in number and are not that significant.

• Unabated price rise have already made the lives of general public miserable. The industrial workers after superannuation are quite unable to maintain the same standard of leaving. How much this paltry pension helps a retired industrial worker? Usually the money received through PF or Gratuity by a retired worker is dried up to meet the expenses towards education and marriage of children or for constructing a small house. The money with which he has now to pull on is the pension, the amount of which is so meager that a family cannot survive with it. It may however help the retired industrial worker to be entitled for a BPL card for his family.

• While giving ruling in favour of EPS 1995, the Hon’ble Supreme Court relied on several aspects including the provisions of 1/3rd commutation of pension, facility for return of capital, reduced pension at even the age 50 years, provisions for valuation of pension fund every year for enhancement of pension rate etc. The said ruling as we know was given on 11th November 2003 and within 5 years of this judgment,

(a) the 1/3rd commutation benefit of pension as per Para 12(a) of the scheme by which the pensioner was to get 100 times the original pension is no longer in existence.

(b) Benefit of 100 times the original pension as Return of capital on death of the pensioner to the widow by surrendering 10% of the original pension as per Para 13(1), 13(2) & 13(3) of the scheme also stands withdrawn. (c) Vide Para 12(7) of the scheme, facility of reduced pension to a worker loosing service before superannuation was there for which reduction of original pension would have been @ 3% for each year.

This has now been modified and has been made 4%. [(a) & (b) Deleted and (c) modified vide GSR 688(E) dated 26.09.2008 w.e.f 26.09.2008]. (d) Vide para 32 of the pension scheme, there shall be annual valuation of the fund to facilitate upward revision of pension. Though it is supposed to be carried out every year, it is revealed from Government data that during last 14/15 years there have been 8 valuations only and the rates at which pension has been enhanced in the first four valuations are as follows: 1) 16/11/1996 – 4 %, 2) 31/03/1998 – 5.5 %, 3) 31/03/1999 – 4 %, 4) 31/03/2000 – 4 %. As per Government there was no allocable surplus during the next four valuations and hence no enhancement. Three more valuations on 31/03/2005, 31/03/2006 and 31/03/2007 have been directed, the reports of which are yet to come. (Source – A letter dated 1st Januray 2009 by the EPFO, Delhi to one pensioner Sri Umapati Tripathy of Uttar Pradesh). Though pension was supposed to be raised at above rates, there are complaints that the same has not been given any effect to. Factually the poor pensioners are not posted with the informations and naturally there is as such no correspondence with the PF offices by them.

It can be stated beyond doubt that the Union Government is instrumental in reducing the benefits of the scheme than to make it more attractive.

Requisites to improvise the Scheme:

Now as the scheme has compulsorily been implemented, one cannot ignore the necessity of effecting improvement in the scheme. The deficiencies noted below will speak of what improvements are essential.

• The amount of pension is meager.
• The maximum amount remittable in the pension fund is Rs.6500/- per annum.
• The Government contribution in the fund is very meager.
• There is no component of linkage with Dearness Allowance.
• Valuation of pension funds is irregular.
• Commutation Benefit is withdrawn.
• Benefit of Return of Capital is withdrawn.
• Percentage reduction enhanced for reduced pension.
• There cannot be any comparison of this scheme with the Pension Scheme for the Government employees.

Few relevant statistics:

• Prior to introduction of EPS 1995, as on 31.03.1995, number of Provident Fund members in the country was 1,87,24,000 out of which member of the then Family Pension Scheme was 1,63,81,000 which means the FPS 1971 being optional around 23,43,000 members did not opt for it. The corpus in the FP Fund at that time was Rs.8419.54 crore and after keeping an amount of Rs.1605 crore for maintaining the future payment to the then 1,70,000 family pensioners, net surplus in the fund was Rs.6814.54 crore which ultimately became the initial corpus for EPS 1995.

• As on 31.03.2007 that is 12 years after the introduction of EPS 1995, the number of PF members is 4,44,04,000, Number of EPS members was 3,57,30,000, total accumulation of fund was Rs. 80,766.22 crore and number of pensioners as on 31.03.2006 was 23,35,883 only.


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  1. P B Verma says:

    Blaming the government for all kinds of apathy is the fashion of the day and is easily acceptable by all.
    But has anybody tried to find out that with a contribution of 541 per month, total contribution per year now is only 6500. Since its a contributory scheme, which private player ( the so called big one) is redy to willing to pay pension at even this rate??? Has anybody tried to compare with the Pension schemes offered by various private player vis-a-vis EPS 1995 and then see for himself, where the EPS stands??
    It needs to be understood that the government is not taking pensionary liability in respect of its own employees after 2004 and they are also expected to be members of NPS, which is a similar contributory scheme. When persons, who had served the Government throughout their life, are deprived of regular pension, and their pension is also dependent upon market forces, how can a person from the Pvt sector expect that the Government shall take the Pension liability upon itself.
    Let us come out of the slumber!!!!
    The only option left out is to enhance the contribution rate and abolish the wage ceiling limit; only then appropriate returns shall be yielded by the scheme.
    A financial scheme with social responsibility has to first make the financial foundations strong.
    With so many constraints,and allied benefits under EPS 1995, I am sure, none of the Private players can actually compete even now

  2. K.Damodaran says:

    I retired from a Multinational company in July 2011 after putting in 23 years of service. Due to some problem with the concerned PF office, my application has not yet been forwarded. It appears that even this meagre pension will not be available during my lifetime.

    Adding insult to injury, my employer states that application for my PF dues can be forwarded only with the pension application. Is this true?? I believe Admin Team of the employer are ill informed.

    I am in pitiable situation as I am unable to pay my Housing Loand EMI. I was planning to clear off the loan from my PF dues.

    Coming back to the pension scheme, it is disaster. What can you expect from a government which has fixed Rs.36.oo as monthly income for BPL count.

  3. Dr.N.Veerraju says:

    I retired as a Deputy General Manger(Exploration) from Mineral exploration corporation Ltd a Govt.of India enterprise in 2006 May after putting a service of 32 years working in different parts of India exploring for mineral wealth.I was in EPS 1995 and now drawing a pension of Rs.1388 for the last 6years which is not sufficient to pay the phone bills.How can govt can expect the retired govt sector officers to survive with the amount of pension is not known.The CPF which was given at the time of retirement was completely exhausted due to childrens marriage/education.This is the state of all the employees retired in public sector enterprises,because of keeping the salary restriction of Rs.6500/ when the scheme was floated.In 1995 the amount of RS 6500 was a good amount because the salary of the class I officer was less than that but presently the salary of class one officer is more than Rs 20000/pm (ie three times it has increased in the initial joining stage it self.
    There is an article in EENADU daily(28th August),protest by EPS 1995 schme employess who are drawing a meager pension of Rs 50/ or so.
    If you see the state/central govt.pensions now a days even a claas IV employee is drawing a pension of more than 8000/ due to so many times DA raise/pension rule revisions.
    After retiring as Dy.General manager,it is becoming very insulting to tell if some body asks that my pension is Rs.1388/after serving in a govt.pubic sector enterprise which is run by Central govt,.
    Hence I request the concerned authorities to look in to the matter and do the needful to raise the pension with reference to price/wage rise as done in the case of govt employees.

  4. V R Menon says:

    Can’t government consider giving BPL facilities to EPS pensioners? That will be a help.

  5. Vinod Kumar says:

    Dear Sir,

    My father is govt employee and he is illitrate . He sumbited his wife name and by mistake the person filled up the form got mistake in typing the spelling name as Amuna Patil instead of Yamuna Patil , Now he will retire in next year 2013.

    How to rectify the such mistake in Employee Pension Scheme.


  6. c.p.saigal says:

    look i served coal industry for 40 years,from 1960 to 2000,coal mines were taken over by coal mines authority.Pension was calculated for 29 with this little amount of pension without any increase,it is becoming difficult to run family expenses,now the company has become MAHARATAN COMPANY.THE GOVT SHOULD LOOK IN TO THE PROBLEMS.
    Where a school teacher n rail driver of our age is getting Rs20000 as pension we get 5000.

  7. sangamesh says:

    hi my mother retired from ksrtc u r giving 1066 as monthly pension in these days 1066 does not fullfil even her medical bills. so please try to raise pension minimum pension to 5000

  8. MKN Kurup says:

    As may be known to everybody concerned, EPS 1995 was implemented when Deve Gowda was the Prime Minister, whose Government was running with the support of Left Parties, mainly CPI(M) who shed crocodile tears for the have-nots and downtrodden. Had the Left Parties been sincere, they would have voted against passing EPS but instead of opposing it they ensured a safe passage of the Bill by walking out from the Parliament. Here it may be pertinent to mention that the same Left Parties organized agitations throughout the country against EPS but when the time came for passage, they indirectly supported. If an illterate MLA or MP gets Pension in thousands without any contribution on their part but for looting the tax payers’ money, whereas a contributor to EPS gets meagre amount in the form of monthly pension, which is not even sufficient to foot the medical bills at the old age. Further, in the case of Government Pensioners, they get periodical hike by way of increased D.A. but irrespective of the spiralling prices of essential commodities and all round increase in day to day expenditure the Pension under EPS, 1995 remains static and the so called friends of the poor and middle class are keeping a blind eye on such injustice. Another thing is that Pensioner gets pension only for a few years. On his death, if the spouse is alive, she may get widow pension for some more years and on her death the payment stops completely and the principal accumulation out of years of contributin by the original beneficiary to EPS stands forfeited. Had the said accumulation been deposited in some Banks under Monthly Income Scheme, the return would have been much more than the Pension amount and on death the principal amount would have been enjoyed by the dependents. Any way, one thing is clear. The Government has no intention to mitigate the sufffering of the EPS Pensioner but the sold purpose of the Scheme is to mis-use the hard earned money of lacs of contributor employees to provide lavish life to the Ministers, MPs, MLAs and senior Government Officers. In nutshell EPS is not a Social Security Scheme but ‘Employees’ Pauperization Scheme’.

  9. Hdas says:

    Since there is all-round increase in commodities and medical treatments, the present pension amount is insufficient to cope with.

    To mitigate our misery, please support and press for the following:-

    1. Increase the monthly pension to all retired Family pension members toRs3000/- to Rs 5000/- p m.

    2. Like D A enhancement from time to time to Govt employees and its pensioners, make provision in the corpus fund of the Family pension scheme, for DA disbursement like wise.

    After all these CPSU employees have also contributed to the nation building and certainly they should not be discriminated.

    Kindly make your good offices for favour in the matter.

  10. HEMANT KUMAR says:


  11. Somashekhar says:

    In India no one will listen to common man. This is country of corrupt Bureaucrats, Corrupt politicians and Greedy Businessmen. The common in this country has no choice but to suffer and accept everything that comes his way. Trade Unions again exist only because they can make money. Who cares for a pensioner’s hues and cries? Even majority of pensioners do not wish to rise their voice. When days are counted why all this fuss??

  12. VSR MURTHY says:

    Thia scheme is a legalised AND forced contribution in India, because the employee does not have any option. Contribution by employer to PF is a part of employee’s CTC to his employer. Thus the amount of 6500 taken away from his PF is taking away from his pocket. If this is not diverted and left in PF, it would earn a much better monthly return on retirement besides leaving the corpus intact. The most disappointing aspect is that the scheme got the approval of parliament when some very big names of INDIAN TRADE UNIONS were part of ruling front. When it was introduced in parliament, some one very big in BJP, (may be sri vijaykumar malhotra or sri ravi shankar prasad or some one else) initially proposed amendments but surprisingly did not press for any of them. It is difficult to understand why neither the TRADE UNION LEADERS NOR THE HONOURABLE MEMBERS OF PARLIAMENT ARE NOT TAKING ANY INITIATIVE TO REVERSE THIS LOSS TO SALARIED CLASS.

  13. girikesh says:


  14. Joohi Begam says:

    at present i am in advance old age i am receiving widow family pension at the rate of Rupees 450.00 per Month in other words Rupees 15 per day from the last 15 years. can you imagine an old aged widow survive in rupees 450.00 monthly pension and she may be able to purchase in rupees 15 for her daily needs including daily meal. I am unable to understand why Government say to the Employees pension scheme 1971 to a beneficial and social security scheme. is is True or what?

  15. K.P.Saxena says:

    Sir,if anybody can help me,I am drawing the Reduced Pension from the age of 50 years,now attain the age 58 year in february,2013.I have sent one Letter to Gurgaon,Bhavishya Nidhi Office,March 2013,But this office has refused to Increase my pension,saying some rule is there,due to which you will not get.Please inform me about such ruling on my Email.

  16. T Damodaran says:

    The pension payable under this scheme as of date is less than what we may have paid to the govt. How can this be allowed. Is the scheme meant for govt. to make revenue or to help the pensioners in their old age. Even some of the state govt. are giving more free allowances to poor people than what we get as family pension even after paying more money by way of contribution. The govt. should immediately revise the family pension to atleast Rs. 6000.00 per month depending on eligibility.

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