Government
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 This scheme was withdrawn w.e.f. 15.11.1995 with the introduction of Employees Pension Scheme 1995 (EPS 1995) which was made compulsory for the FPS 1971 members.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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35 Comments
It is nothing but the insensitivity of the government that since 1995 (till 2010) it never felt the need of increasing the limit of Rs. 541 (or 8.33% of Rs. 6500) for the voiceless pitiable workers. During this period how many times salary, pension and allowances for the politicians, judges and bureaucrats have been increased? Where is our democracy heading towards – common men were nowhere in implementation now they are nowhere even in planning.
comments of Rakesh kumar Bajpai is very good. The increase in DA , pension etc. all to be linked according to the wages being given to the poltician
Looking to the amount of pension on supernuation, it is not for substance but for tea and coffee to wake up to see dark days of starvation even after dedication of 35 years life in service of the organization. There is hike in wages as well market prices and to enable hand to mouth for two person minimum rs. 15000 require. So contribution towards EPF-95 limit should increase from 6500 to 30000/-.
No doubt govt. is in pressure of corporate.
It was said that the govt will meet during APRIL 2011 to alleviate the problems of EPS1995.will it give a slight attention at least in the midst of tsunami of 2G scam scandal.
What is the status of the meet supposed to be held in APRIL 2011? Provisions of EPS-95 with regard to benefits of its members who worked in Central Govt Public Sector Undertakings shall be made exactly same as provisions with regard to benefits of General Provident Fund for Central & State Government employees , on the basis of equality in the matters of social justice
Kind intervention by the central board of trustees and ministry of labour and employement to set right the grievances of the EPF 2995 pensioners problems also avoid the loosing the money from PSU retired they have not able to get the pensions. It is pitiable thing. Kindly look in to the matter by the UPA govt. at the earlest with out further delay,
Requested for all the EPF 1995 pensioners are requested to join to fight to get real justice, where the un justice done by the cental EPF Trust
There are many political parties in TAMILNADU vehemently arguing for EQUITABLE EDUCATION in the schools of TAMILNADU in the name of social justice.
Both the communist parties are supporters of implementation of EQUITABLE EDUCATION . Why they do not bother to talk about
EQUITABLE PENSION is something that makes me wonder about their level of knowledge of social justice.
There should not be two pension schemes in our land , one for GOVT ( STATE AS WELL AS CENTRAL)employees and one for the unfortunate others if we are really serious about social justice
The above factual details are an eye opener and shows the scant
regard the GOI showing towards industrial workers.In Our political system Ministers & politicians change every 5 years and even if the same memebers continue their political existance is top priority for them. The other key players in shaping the economic/social policies are the top burecrats ensure to protect the interestst of central govt. retirees at every stage of policy formulation starting from specifying the terms of pay commissions, influencing the comissions in their favour and finally ensure implementation of all the benefits with retrospective date by linking index based pension benefits (starting from first pay commission to vith pay commission in 2008). Similarly the Trade Unions give last/or no importance to retired employees sufferings, while On the other hand the retired employees because of their age and other family commitments of life and thus continue to lead life with heavy financial suffering. It is understood that Govt. has set up a committee to review the EPS’95 and nothing fruit ful has resulted since last 3-4 years.
EPF PENSION1995 IS INFERIOR TO THE AGE OLD PENSION LIKE VIDHVA VETHANA,SANDYA SURAKSHA, OLDER AGE PENSION, AND THE RECOMMENDATION RECENT REPORT DOES NOT COVER THE P.S.U RETIREES, EVENTHOUGH MINIMUM PENSION RECOMMENDED IS THOUSAND FOR FUTRURE RETIREES. SO THERE IS NO BENIFIT FOR THE PERSON ALREADY RETIRED.=GOPAL SHASTRY
I have beeb served 25 years in a public sector undertaking company and retired in Feb. 2003. Since then I am getting only Rs. 816/- per month. Now I am 63 years old, can govt. should consider the problem of those persons who are getting too low pension after serving life? During the period so many time Govt. has raised the salary and other benefits to Govt.employees and others. The same revision of family pension is lying pending since long. When it will be impleted in future?
This is why a Anna type of revolution is necessary to force the govt. (all are equal in this respect, whether UPA, NDA etc.) revise these draconian provisions. Every govt. has come to loot the country and its people of its dues.
I have been served in a PSU for 32 years and retired in april 2003.Since then i am getting Rs.896/month It is high time for the
Govt to consider and issue BPL card to all poor PSU workers.
This article is an eye opener and thanks to the writer.EPS 1995 is the most cruel joke GOI has played with poor employees of the nation.
I had been working in a PSU since 29.2.1973 and retired on 30.06.2008.Pension claim forms with all required details submitted in 2009 to the employer. Inspite of repeated requests and reminders no response is coming either from the employer. On contacting the EPFO office at Ranchi,informed that my pension claim has been rejected in Dec.2010. Inspite of repeated requests and reminders, the employer is silent.
If anybody can help me by informing the next course of action I have to take to get the pension granted?
I have retired from a navaratna PSU in may 2010 and due for
my pensions and arrears since 2008 . What is in fate?
I have retired from A Navaratna PSU in 2010.Yet to get pension
and arrears from 2008 Fate?
Both NDA & UPA governements are at fault for giving a raw deal the PSU employees. Judiciary is also supporting the government. Then where will we get justice from ? Minimum pension has now been increased to Rs 1000/-. What about the maximum ? Now a days, faith in judiciary has totally become Nil due to their blind support of the government in EPF 95 PENSION Scheme. I do not who will take care of in our old age?
I am sorry, minimum pension of Rs 1000 is yet to be fixed by the government.
PENSION SHOULD BE Rs 5000/= FOR PSU EMPLOYEES,
WHAT HAPPENS ON Rs 1200/==
PARESH NATH PRASAD
HINDUSTAN CABLES
WEST BENGAL
I did a similar article on how the EPS is cheating its subscribers! If you check my calculations you would realize that Annuity plans give almost 3 times returns than those given by EPS.
http://apnaplan.com/employee-pension-scheme-eps-how-good/
It is a shame on the part of EPF to give just Rs.1000 as pension. As we know that A surver in a small hotel will get more than Rs.1000/- as tips beter to abolish the scheme and return the employees and Employers subscription along with existing Fixed deposit interests. It is of no use
I RETIRED DUE TO CLOSURE OF THE UNIT IN 1997 AND GOT NO JOB ELSEWHERE AFTER THAT,PEOPLE DOING NOTHING R GIVEN PENSION IN DIFFER DIFFER NAMES WITH REVISION FROM TIME TO TIME BUT WE THE MAJDOOR WHO HAS CONTRIBUTED THEIR HARD EARNED MONEY IN EPF-95scheme are left for begging before govt.it is really shameful.I WOULD ALSO LIKE TO KNOW THE LOGIC BEHIND THAT ON ONE SIDE AGAIN HAMMER ON WORKERS BY REDUCING RATE OF INTREST ON PF COVERING 4-5 CRORES WORKERS AND ON THE OTHER SIDE INCREASING INTRESTS ON POST OFFICE SCHEMES.WHAT SHOULD WE UNDERSTAND FROM THIS THE GOVT HAS LOST IT’S BALANCE OR TRYING TO WORSEN THE CONDITION OF WORKERS.
This sheme is a slap on the faces of employees of sick PSUs working on 1987/1992 pay scales. A general Manager rank officer gets a little pension which is very less than the monthly interest of the amount contributed to the fund and the contribution is also gone to the fund for ever. Is this the real requirement of the employees. This scheme is not linked with price index which is the major draw back of the csheme. Govt should withdraw this immediately.
For the past 35 years the retired Indian seafarers and their families are being given Rs:200/- as gratuity monetary assistance per month.their funds grew to Crores but till today their monetary assistance has not increased,although the seafarers unions of India are board members are they listening or just acting like IDIOTS.
what is latest development of EPF 1995 pension
I have worked in Food Corporation of India,more than 32 years.though I contributed from 1973 to 2004 under EPF1971/1995 pension,still getting Rs.1139/- as monthly pension.same amt.without any increase,which is inadequate to meet current inflation.In 2004,we purchsed rice @Rs.10/-,milk @rs.12 per ltr.So an increase atleast to a min.of Rs.3000/-p.m is needed.Minister for personnel/pension affairs to look into.Even an MP/MLA worked for a period of 5 years getting more pension without any monetary contribution to pension.What about the face of a govt.servant served more tha 30 years.ok into
It is high time employees should avail PF .TAKE EMPLOYERS CONTRIBUTION AS PERKS AND OPT OUT OF PF SCHEME WHERE BASIC SALARY IS MORE THAN 6500/MONTH .INVEST PF(EMPLOYERS CONTRIBUTION) IN LIC SCHEMES AND GET BETTER RETURN IN LIFE POLICIES.PENSION IS PURELY CHEATING.
Amount of pension is not only meagre but is ridiculous. No sane person can survive with it. IT is a shame to call it a pension. All trade unions should wake up and wage a concerted agitation to solve this problem…
Defination of Democracy need made to read as Govt.is of and for the rich.No concerned is bothered and think for the scheme which introduced long ago.Rich and highly paid brains are deployed doing nothing ,even do not feel insulted. God only can save poors,that is what is message by the existing system of Government.Who is to be blamed ?
What and when reaction can be expected from the responsible Authorities? Will it be if any only an eye wash? We all are encouraging them by not raising our voice and coming forward.
This is the time all of us should approach authorities.
Kindly put an end to this hapless scheme and give pension on the basis of contribution made
It is a sorry state, Can any body call EPF-1995 a pension Scheme it is K A R A B Scheme
As per Government of India, only Central & State Government Employees are only human beings who need their standard of living to be maintained properly post retirement and rest all (Private sector employees) are beggars and should lead a life of BPL life. Actually, most of Govt. officials/workers barring very few exceptions are corrupt and they earn hefty amount through corrupt practices apart from their huge salaries that itself is more than enough for their life time as well as for their off springs hence they do not need any pension at all post retirement. But private sector workers will neither have any access to any other source of income nor their salaries are high as compared to Government employees. This shows the discriminatory policy regime of Government of India.
It is un-fortunate that the central board of provident fund trustees have been sitting over the issue of hiking epf pension when at a time government under the guise of progressive policies. has been hiking old age and widow pension etc.,It is high time the government should have raissed the epf pension to mitigate the hardships of epf pensioners, several of whom are in the evening of their livses. ,