EPS Pensioners Urge Govt To Align Pension Wealth Calculation With NPS

Pensioners under the EPS-1995 has renewed its demand for pension calculations to be aligned with the NPS and for an 8 per cent rate of interest to be applied to the scheme

A Bengaluru-based association of pensioners under the Employees' Pension Scheme (EPS)-1995 has renewed its demand for pension calculations to be aligned with the National Pension System (NPS) and for an 8 per cent rate of interest to be applied to the scheme.

In a response to an item in the FAQ section on EPFO pensioners, published on Sunday, September 15, the ITI Retired Officers Association (IRIROA) highlighted discrepancies in how pension wealth is calculated under the EPS compared to the NPS. The association noted that while both systems are contributory, the EPS determines pension amounts based on a "fixed pensionable salary" rather than on the accumulated pension fund, as is done in the NPS.

Providing examples, the IRIROA pointed out that under the current EPS-95 scheme, a retiree with 35 years of service receives a maximum pension of Rs 7,500 per month ( Rs 90,000 annually), which equates to a 3.06 per cent return on the accumulated pension fund. For 25 and 30 years of service, the monthly pension amounts are Rs 5,357 (5.14 per cent return) and Rs 6,428 (3.98 per cent return), respectively.

The association argues that an 8 per cent rate of return on the accumulated pension would significantly increase payouts, with pension amounts rising to Rs 8,329, Rs 12,907, and Rs 19,633 for 25, 30, and 35 years of service, respectively.

In a representation submitted to the Prime Minister and Union Ministers for Finance and Labour a few months ago, the IRIROA also called for the introduction of a commutation facility, allowing pensioners to access a portion of their pension wealth in case of emergencies.

Meanwhile, the number of pensioners receiving government support through the Employee Pension Scheme (EPS) is anticipated to rise for the third consecutive year in FY24, according to the Ministry of Labour's latest annual report. The data shows that recipients of the minimum monthly pension of Rs 1,000 are expected to increase by nearly 4 per cent, from 2.05 million in FY23 to 2.13 million in FY24.