Will minimum go up to Rs 7,500 after EPS pension hike? Govt replies

The Centre has clarified its stand on the long-pending demand to raise the minimum EPS pension from Rs 1,000 to Rs 7,500

The Centre has ruled out, for now, any increase in the minimum monthly pension under the Employees’ Pension Scheme (EPS), despite a long-standing demand to raise it to Rs 7,500 along with dearness allowance (DA). The clarification came in Parliament, where the government said it remains focused on ensuring the long-term sustainability of the pension fund while providing social security to Employees' Provident Fund Organisation (EPFO) members.

 

The response comes shortly after the notification of the new Employees’ Pension Scheme (EPS), 2026, which replaces the earlier EPS, 1995. While the new framework introduces several operational improvements, it does not change the minimum pension amount or the formula used to calculate pension.

 

 

No decision on raising the minimum EPS pension

 

The issue was raised in the Lok Sabha by Shiv Sena (UBT) MP Bhausaheb Rajaram Wakchaure, who referred to the demand of the EPS-95 National Agitation Committee for increasing the minimum pension to Rs 7,500 a month, along with DA.

 

Responding to the query, Minister of State for Labour and Employment Shobha Karandlaje said the government has not announced any proposal or timeline to increase the minimum pension beyond the current Rs 1,000 per month.

 

The minister said the government is committed to strengthening social security for EPFO subscribers while balancing the financial sustainability of the pension fund and its future liabilities.

 

How the EPS pension fund is financed

 

The government also explained how pensions under the scheme are funded.

 

The Employees' Pension Fund is built through:

 

Employer contribution of 8.33 per cent of wages towards the pension fund.

 

Central government contribution of 1.16 per cent of wages, subject to a wage ceiling of Rs 15,000 a month.

 

Annual valuation of the pension fund to ensure its financial health.

 

The government also noted that the minimum pension of Rs 1,000 is supported through budgetary assistance, in addition to its regular contribution to the pension fund.

 

What changes under EPS 2026?

 

The Employees' Pension Scheme, 2026, notified under the Code on Social Security, 2020, has replaced the Employees' Pension Scheme, 1995, and the Employees' Family Pension Scheme, 1971.

 

Although the structure of the pension scheme largely remains the same, the new framework introduces several administrative improvements aimed at making pension processing faster and more accountable.

 

Key changes include:

 

Pension claims are to be settled within 20 days.

 

Pensioners will be entitled to 12 per cent annual interest if claim settlement is delayed beyond the prescribed timeline.

 

Provisions relating to higher pension have been incorporated into the scheme.

 

Employers will have greater digital compliance obligations.

 

The scheme has been renamed as Employees' Pension Scheme, 2026.

 

These changes are intended to improve service delivery rather than increase pension payouts.

 

Pension calculation remains unchanged

 

One of the key concerns among EPFO subscribers was whether the new scheme would alter the pension calculation method.

 

The answer is no.

 

The monthly pension under EPS 2026 will continue to be calculated using the existing formula:

 

Monthly pension = (Pensionable salary × Pensionable service) ÷ 70

 

This means pension entitlement will continue to depend on an employee's pensionable salary and the number of years of pensionable service, with no change in the calculation methodology.

 

What does this mean for EPFO members?

 

For existing EPS pensioners, the latest clarification means there will be no immediate increase in the minimum monthly pension, despite continued demands from employee unions and pensioners' associations.

 

For current EPFO subscribers, the operational improvements under EPS 2026 could result in quicker pension claim processing and compensation in the form of interest if delays occur. However, the amount of pension they eventually receive will continue to be determined by the existing formula and applicable scheme provisions.

 

The government's latest stand also indicates that any future revision in the minimum pension would require a broader policy decision after considering the financial implications for the pension fund. Until such a decision is taken, the minimum EPS pension will continue to remain at Rs 1,000 per month, even as the new EPS 2026 framework brings procedural changes aimed at improving the overall pension delivery system.