The issue was raised in Parliament, where Minister of State for Labour and Employment Shobha Karandlaje said the government has received requests from trade unions, public representatives and other stakeholders to increase the minimum pension and to link the dearness allowance (DA) to basic salary.
Government says discussions are underway
According to the minister, the government is aware of the demand for a higher minimum pension under the Employees’ Pension Scheme, which now operates under the EPS-2026 framework.
She said the proposal is being examined, but any decision will depend on factors such as pension fund contributions and the long-term financial impact on the scheme. The matter will be taken up in consultation with stakeholders before any final decision is made.
At present, the government has not approved any increase in the minimum pension.
Minimum EPS pension remains ₹1,000
The minimum monthly pension under the Employees’ Pension Scheme continues to be ₹1,000.
The minister clarified that the government has not taken any decision to increase the minimum pension to ₹7,500, despite repeated demands from employee organisations.
How the current EPFO pension system works
Under the existing pension rules, the Employees’ Pension Scheme is a defined contribution-defined benefit scheme. This means the pension benefits are linked to the contributions made to the fund.
Currently:
- Employers contribute 8.33% of an employee’s basic salary towards the pension fund as part of the overall 12% EPF contribution.
- The Central government contributes 1.16%.
- Pension contributions are calculated on a maximum monthly salary of ₹15,000.
- The minimum monthly pension is fixed at ₹1,000.
The government said the scheme is a social security programme funded through contributions, and any revision in benefits must take the fund’s financial sustainability into account.
What about dearness allowance?
The government also responded to demands to merge dearness allowance (DA) with basic salary.
Following the announcement of the 8th Pay Commission, employee organisations have sought the merger of DA with basic pay. However, the government said it has not announced any proposal to do so.
Under existing rules, DA is generally considered for merger with basic salary when it crosses the 50% mark during a Pay Commission review. No decision has been taken on this issue so far.
What happens next?
The government said discussions on increasing the minimum EPS pension and linking DA with basic salary are still at a preliminary stage.
For now, the minimum pension under the Employees’ Pension Scheme remains ₹1,000, and no timeline has been announced for any revision. Any future decision will be taken after consultations with stakeholders and an assessment of the scheme’s financial obligations.
(Edited by : priyanka deshpande)
