On Monday, Shobha Karandlaje, the Union Minister of State for Labour and Employment, stated in a written reply to the Lok Sabha that the monthly pension for workers under the Employees’ Pension Scheme (EPS) cannot be linked to inflation.
Nature of EPS-1995
The EPS 95 operates as a defined contribution defined benefit scheme. Karandlaje explained that linking the monthly pension of workers under the Employees’ Pension Scheme, 1995 (EPS-1995) to the cost of living index had been considered but was deemed infeasible. This is because EPS-1995 is a funded scheme, and linking benefits to inflation, which fluctuates, would result in open-ended values that could undermine the scheme’s financial stability.
Government Review
In 2018, the government established a highly-powered monitoring committee to conduct a thorough evaluation and review of EPS-1995. Following a comprehensive assessment, the committee concluded that linking pensions to inflation was not viable.
New Subscribers to EPFO
In the fiscal year 2023-24, the total number of new subscribers added to the Employees’ Provident Fund Organisation (EPFO) was 10.9 million.
