EPFO Minimum Pension Hike: As per media reports, the Employees' Provident Fund Organisation (EPFO) is expected to keep the EPF interest rate between 8% to 8.25% for the financial year 2024-25.
Long-Awaited Demand for Pension Hike
There has been a persistent demand from private-sector employees for an increase in the minimum pension under EPFO. In September 2014, the Central Government had set a minimum pension of ₹1,000 per month for pensioners covered under the Employees’ Pension Scheme (EPS).
Under the EPF scheme, employees contribute 12% of their basic salary to their Provident Fund, and employers match the contribution. 8.33% of the employer’s share goes into EPS, while 3.67% is added to the EPF account.
EPFO Members’ Demands
The EPS-95 Agitation Committee has reported that Union Labor Minister Mansukh Mandaviya has assured action on their demands, including an increase in the minimum pension under EPS-95. According to a statement by the pensioners’ body, the central government is now considering the demands of over 78 lakh pensioners across India.
The pensioners’ body has also demanded:
- A rise in the minimum pension
- Free medical facilities for retired employees and their spouses
- Rectification of errors in higher pension applications
The EPS-95 National Agitation Committee (NAC) is hopeful that after a decade-long wait, the pension amount under EPS-95 will finally be revised.
Will the Minimum Pension Increase in 2025?
Ahead of Budget 2025, a delegation of EPS-95 retired employees met Finance Minister Nirmala Sitharaman, urging her to increase the minimum pension to ₹7,500 per month and include Dearness Allowance (DA). The Finance Minister assured them that their demands would be considered.
For nearly a decade, pensioners have been requesting an increase in the current pension of ₹1,000, which they believe is inadequate given rising inflation and healthcare expenses.
Key Agenda for the Next EPFO Meeting
The Central Board of Trustees (CBT) of EPFO is scheduled to meet on February 28, 2025, to finalize the EPF interest rate for 2024-25. While the interest rate will be the primary discussion, the pension hike issue may also take center stage.
Many pensioners and employees argue that the current pension is too low given the increasing cost of living. Pressure on the government to meet this long-pending demand continues to build. All eyes are on the upcoming CBT meeting, where a decision on the pension increase is expected.
Fixed Interest Rate Proposal for EPFO Members
The government is also considering a fixed interest rate scheme for EPFO account holders, ensuring stable returns despite market fluctuations.
Interest Stabilization Fund for EPF
As per Economic Times, the government is evaluating the possibility of an Interest Stabilization Reserve Fund for EPFO, ensuring a consistent interest rate for contributors, regardless of investment performance. The Ministry of Labor and Employment is conducting a feasibility study on this initiative.
Expected EPF Interest Rate for 2024-25
According to reports, EPFO is likely to maintain an interest rate between 8% and 8.25% for the financial year 2024-25.
How the EPF Interest Rate is Determined
The EPFO’s Central Board of Trustees (CBT), led by the Union Minister of Labor and Employment, plays a crucial role in deciding the EPF interest rate. The process includes:
- EPFO proposes the interest rate.
- CBT reviews and approves it.
- The Finance Ministry grants final approval.
- The approved interest rate is credited to EPF accounts.
EPF Interest Rate for 2023-24
For the financial year 2023-24, EPFO increased the interest rate from 8.15% (2022-23) to 8.25%. The upcoming CBT meeting will determine whether any further changes will be made for 2024-25.
With the CBT meeting approaching, significant decisions regarding pension hikes and EPF interest rates are expected. If approved, the pension increase to ₹7,500 will provide much-needed relief to pensioners.
