The formula for pension calculation under the Employees’ Pension Scheme (EPS)-95 of the Employees’ Provident Fund Organisation (EPFO) should be revisited, according to the Bengaluru-headquartered ITI Retired Officers Association.
Arguing for an arrangement wherein the calculation formula should have a direct bearing with the Pension Fund, the association’s president, R. Sridhar, contends that under the existing system of calculation, the “loss” incurred by a pensioner is “quite substantial” for contributions made against a pensionable pay of ₹15,000 on the assumption that the monthly contribution to the Pension Fund would accumulate to its net present value at an annual rate of 8%, as is being the case with regard to PF contributions.
Corpus doubled
The EPS-95 is funded through the transfer of 8.33% of employer’s monthly Provident Fund contributions to employees, coupled with the Central government’s share of 1.16% of the monthly wages of employees, limited to the amount payable on pay of ₹15,000 per month. As per an estimate, the corpus of the Pension Fund almost doubled in the last five years from about ₹3.94 lakh crore in 2017-18 to around ₹7.8 lakh crore in 2022-23. Provisional data indicate that during the previous financial year, the contribution of employers to the Fund totalled approximately ₹56,000 crore and that of the Union government, nearly ₹8,715 crore.
The association, with its members of over 1,000, in a recent representation submitted to Prime Minister Narendra Modi and others, urged the authorities not to halve the amount of pension in the event of death of a member-pensioner before making the pension payment to the spouse. In view of the constant increase in the corpus of the Pension Fund, a provision should be made to revise the pension periodically, in proportion to the living cost of the index.
