Pension concerns
Context:
The Central Board of Trustees of the EPFO recommended a slight increase in provident fund deposits for 2023-24.
Relevance:
GS-02 (Government Policies & Interventions, Welfare Schemes)
Prelims:
New Pension Scheme, Old Pension Scheme, PFRDA. National Pension Scheme, Unorganized Sector.
Mains Question:
Discuss the challenges faced by pensioners in India, focusing on the demand for an increase in the minimum pension amount and issues related to the Employees’ Pension Scheme (EPS). (250 words)
Key Highlights:
- There’s a long-standing demand for an increase in the minimum pension amount, which has not been met.
- The Finance Ministry rejected a proposal to double the minimum pension, citing budgetary constraints.
- The EPFO’s annual report challenges the government’s argument for not increasing the minimum pension.
- Equating spouse pension amounts and addressing issues faced by pre-2014 retirees are also crucial.
Dimensions of the Article:
- EPFO’s Recommendation and Pension Demand
- Finance Ministry’s Rejection and Budgetary Concerns
- Challenges and Issues
EPFO’s Recommendation and Pension Demand:
- The recommendation for a marginal increase in provident fund deposits for the upcoming fiscal year by the Central Board of Trustees of the EPFO may not come as a surprise, given the pattern of previous years.
- However, this has not appeased those advocating for an increase in the minimum pension amount. Despite promises made by the ruling party, the demand for a raise from ₹1,000 to ₹3,000 remains unmet.
Finance Ministry’s Rejection and Budgetary Concerns:
- The Finance Ministry’s refusal to double the minimum pension is primarily attributed to budgetary constraints.
- The Ministry expressed concerns about the substantial increase in budgetary support required under the Employees’ Pension Scheme (EPS), 1995, if the minimum pension were to be doubled.
- However, the EPFO’s annual report suggests that the doubling of the minimum pension would not strain the budget significantly.
Challenges and Issues:
- Apart from the minimum pension demand, there are other pressing issues related to pension schemes.
- One such issue is the disparity in spouse pension amounts compared to member-pensioner benefits.
- Additionally, the rules regarding higher PF pensions have been framed post a 2022 Supreme Court judgment, leaving out many pre-2014 retirees. Addressing these issues comprehensively is essential for the welfare of senior citizens.
Way Forward and Conclusion:
- Comprehensive Pension Reform: Moving forward, there is a need for comprehensive pension reform that addresses the concerns raised by pensioners. This includes revisiting the minimum pension amount, ensuring equitable spouse pension benefits, and resolving issues faced by pre-2014 retirees.
- Government’s Role and Responsibility: The government must recognize the importance of providing adequate financial support to retired individuals, especially those from lower-income backgrounds. Pension schemes should aim to uplift the lives of retirees and provide them with a sense of financial security in their old age.
