Govt likely to raise minimum pension under EPS to Rs 3,000 per month: Sources

Govt likely to raise minimum pension under EPS to Rs 3,000 per month: Sources

The central government is likely to raise the minimum pension under the Employee Pension Scheme (EPS) to Rs 3,000 per month from Rs 1,000 at present, a senior government official told Moneycontrol. The increase in the minimum pension is likely to be effective in the next few months, the person added.

The EPS is a retirement plan in India managed by the Employees' Provident Fund Organisation (EPFO). It provides a pension to employees in the organized sector after retirement, ensuring a steady income post-retirement. The EPS is funded by a portion of the employer's contribution to the EPF.

At present, out of the employer's 12% contribution to the Employees' Provident Fund (EPF), a portion of 8.33% goes to the Employees' Pension Scheme (EPS), while the remaining 3.67% goes to the EPF.

“We’re likely to raise the minimum pension amount to Rs 3,000 per month. It has been long due,” said an official. In 2020, the labour ministry had sent a proposal to raise the minimum pension under the EPS to Rs 2,000 per month, with additional Budgetary support, to the finance ministry but the same was not approved by the latter.

In 2025, during the pre-Budget talks, a delegation of EPS retired employees had met Finance Minister Nirmala Sitharaman to put forth their demand on increasing the minimum EPS pension to Rs 7,500 per month, but they didn’t receive any assurance. The total corpus of EPS is over Rs 8 lakh crore, and total number of pensioners under the scheme are about 7.85 million. Of the total, over 3.66 million receive minimum pension of Rs 1,000 per month.

“The labour ministry is currently analysing at the additional expenses for giving a higher pension (Rs 3,000),” said the person quoted above. In FY24, the ministry spent Rs 1,223 crore in providing minimum pension to pensioners under the EPS, which is 26% higher than Rs 970 crore spent in FY23.

Currently, under the EPS, the central government provides a grant-in-aid under the minimum pension scheme component (with effect from September 2014) towards reimbursement of the difference between the minimum pension of Rs 1,000 and the actual member pension, if the pension is lower than Rs 1,000.

Earlier this month, a Parliamentary panel headed by Bharatiya Janata Party (BJP) Member of Parliament (MP) Basavaraj Bommai, asked the labour ministry to consider “with a sense of urgency” increasing the minimum pension of Rs 1,000 under EPS, given the “manifold increase in the cost of living”.

Akhil Chandna, Partner, Grant Thornton Bharat said: “If the minimum pension is increased, it will be a welcome move as it will provide critical support, specially to employees in low-income brackets post their retirement as well the dependent family members.”

Sandeep Vempati, economist, BJP told Moneycontrol: “As measured by CPI, inflation has increased by 72 percent over a period of 11 years between March 2014 and March 2025. And the International Labour Organisation (ILO) advocates indexing pensions to inflation regularly.

However, the prevailing global economic uncertainty and the Union Government's fiscal glidepath add to uncertainty about the quantum of increase in minimum pension and the timing of implementation.”