The Employees’ Pension Scheme has witnessed consistent expansion in its coverage, with the number of pensioners, disbursements, and the fund size steadily increasing over the years. However, a significant portion of beneficiaries still receives only modest monthly pensions.
Out of the 3.64 million members, the majority receive the minimum monthly pension stipulated by the scheme, which is up to Rs 1,000. Only 26,769 members receive a monthly pension exceeding Rs 5,000. On a monthly basis, more than 1.8 million pensioners benefit from the minimum pension of Rs 1,000 per month, as per the data presented in the Employees’ Provident Fund Organisation’s latest Annual Report 2022-23. The number of pensioners receiving pensions above Rs 1,000 gradually decreases. Slightly over 1.17 million pensioners receive a monthly pension ranging from Rs 1,001 to Rs 1,500, while 868,000 pensioners receive a monthly pension between Rs 1,501 and Rs 2,000.
This data highlights that the average pension received by formal sector workers in the country under the Employees’ Pension Scheme is a modest Rs 1,506 per month. There is an ongoing proposal to revamp the scheme, and the Employees’ Provident Fund Organisation (EPFO) is working on implementing the Supreme Court’s ruling on higher pensions. The Parliamentary Standing Committee on Labour has previously called for increasing the minimum pension under the scheme to Rs 2,000 per month, acknowledging the inadequacy of the current amount. Pensioners themselves have been advocating for higher pension benefits under the scheme.
The Employees’ Pension Scheme of 1995 is funded through the diversion of 8.33% of the monthly wages from the employer’s share of Provident Fund contributions, along with a contribution of 1.16% of the monthly wages (limited to a pay of Rs 15,000) by the Central Government.
In the fiscal year 2022-23, the Employees’ Pension Scheme disbursed a total of Rs 21,796.85 crore to over 7.55 million pensioners. Out of this amount, Rs 14,444.6 crore was allocated for pension payments, while another Rs 7,352.25 crore went toward withdrawal benefits. Remarkably, despite a projected actuarial deficit in the fund’s valuation, there have been no cash flow issues. The scheme has maintained a consistent surplus of receipts over outflows since its inception.
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In tandem with the increase in pension and withdrawal benefit payments, the scheme has experienced a continuous rise in receipts and the overall fund size due to growth in membership and general wage increases. The accumulated corpus of the Employees’ Pension Scheme has steadily grown, reaching Rs 7.8 lakh crore by the end of the last fiscal year, marking a nearly 98% increase since 2017-18.
