EPFO Bonus May Go In Exchange For Pension Hike

The government is likely to raise the minimum pension to Rs 1,000 per month for the workers contributing to the Employees Provident Fund Organisation, or EPFO, but employees will have to sacrifice the bonus they get on 20 years of pensionable service.

The bonus can be retained if the eligibility age for pension is raised from 58 years to 60 years to garner additional Rs 539 crore required to fund the proposed increase in pension.

The two proposals, which will be examined by the Central Board of Trustees, the policy-making body for the EPFO, on Friday have raised the hackles of trade unions which say that the government was making workers pay for something that was it's responsibility.
"We do not favour either of the two options as in both cases the government is taking money out of the workers' pockets. And, it is the government which will take credit in the end," AITUC Secretary DL Sachdev told ET.The EPFO has about 35 lakh pensioners of which 14 lakh get a monthly pension of less than Rs 500, according to EPFO data of March 31, 2010.

The labour ministry was in favour of dropping the bonus as it felt the savings generated will be sufficient to meet the additional cost of providing minimum pension of Rs 1,000 and also support 5% relief to all pensioners who are drawing more than Rs 1,000 per month, a government official said.

Labour Minister Mallikarjun Kharge, who chairs the CBT, had suggested that the burden of raising pension be shared by the government and workers, but according to the proposals under consideration, workers will have to foot the bill."It is unfortunate that the government is now trying to pass on the entire burden to workers," Sachdev said.For raising the retirement age form 58 years to 60 years, as suggested by the EPFO, an amendment will be required in the EPF & MP Act and EPS' 95.EPS'95 will also have to be amended for withdrawing two year's bonus currently available on completion of 20 years of pensionable service.