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Govt. Push for Rs. 1,000 Monthly Pension Plan
The labour ministry has proposed a minimum pension of R1,000 a month for all those who subscribe to the Employees’ Pension Scheme (EPS). If implemented, the move will benefit nearly 3 million workers engaged in small and medium enterprises with higher retirement benefits.
Under the EPS 95 scheme, which has been in operation since 1995, a part of the employees’ provident fund contributions are set aside into a separate corpus which they can claim as pension after retirement, either as a lump sum or as a monthly payment.
The amended scheme, for which the labour ministry has moved a cabinet note, would imply that the Centre may have to subsidise the fund through a budgetary grant to raise the pension level for all those who, as per their contributions, are eligible for a much lower payout.
Alternatively, it may have to adopt a model of a rolling debt by which it pays new retirees by dipping into the pool of high-income savers who have several years to reach the age of superannuation.
Hindustan Times, New Delhi, 25-06-2012