Some changes will be set forth from 2025 to raise everyone’s minimum pension under EPS-95 of ₹1,000 per month to ₹7,500 per month from May 2025, as announced by the EPFO. This seven-time jump with a new DA on inflation will be aimed at providing greater financial security to some 60 Lakh pensioners. Let us discuss the biggest reforms, eligibility, and impact of the reform.
Exorbitant Pension Increase
The increase in the minimum pension to ₹7,500, after being stagnant since 2014, is a 650% increase, thus fulfilling the long-standing demand of pensioners and trade unions. The minimum monthly pension adjustment is a response to rising costs of living. With inflation pegged at 5.2% for 2024, retirees must now afford at least some essential expenses such as healthcare and housing. A DA facility based on AICPI will also be introduced to periodically revise pensions on price changes. This was previously available only to the government employees.
Eligibility Criteria
Pensioners must fulfill the following to receive a pension of ₹7,500:
- Any person 58 years and above must have served for at least ten years.
- The pensioner must have an EPFO account linked with Aadhaar and a bank account.
- To be eligible, a person must be a member of EPS-95 that is applicable to the organized sector employees.The scheme also caters to widows/widowers and dependent children of a deceased pensioner, thereby expanding social security cover. More than 6 million pensioners, especially from low income and unorganized sectors, would be covered under this scheme that will ensure dignified living for retirees.
Implementation And Funding
The present proposal for pension hike, subject to final approval of the Ministry of Labour and Central Board of Trustees (CBT), is to be funded by the Government jointly with the EPFO. An amount of ₹980 crore in the present allocation to fund pensions of ₹1,000 would be, therefore, considerably higher at about ₹6,000 crores for the new amount. The matter is under review as to final recommendations of the Parliamentary Committee set up under the Chairmanship of Shri Basavaraj Bommai, MP, and third-party evaluation sought by the Ministry by the end of 2025, to assess financial viability measures.
Benefits And Future Prospects
The reforms increase the quality of life for the elderly because it ensures the access to better health care and nutrition. Further benefits, e.g., introduction of health insurance or increase in EPS contribution ceiling to ₹21,000, are being discussed. Pensioners are advised to update their KYC details on epfindia.gov.in to ensure that payments are credited without delay.
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