Govt Likely to Raise Minimum EPS Pension to ₹3,000: Relief in Sight for Retirees

In what could bring major relief to millions of pensioners, the central government is likely to raise the minimum pension under the Employees’ Pension Scheme (EPS) to ₹3,000 per month, a significant increase from the current ₹1,000. According to government sources, the move could be implemented in the coming months, marking a long-awaited change for low-income retired employees in India.

The Employees’ Pension Scheme (EPS), administered by the Employees’ Provident Fund Organisation (EPFO), is a retirement support plan that ensures a fixed income to organised sector workers after retirement. This pension is funded through 8.33% of the employer’s contribution from the total 12% directed towards the EPF.

Why the Hike Was Needed

An official familiar with the developments stated, “We’re likely to raise the minimum pension amount to ₹3,000 per month. It has been long due.”

This decision comes amidst rising inflation and an increased cost of living, especially for the elderly population. A Parliamentary panel, headed by BJP MP Basavaraj Bommai, recently urged the Labour Ministry to address the issue on an urgent basis, citing the “manifold increase in the cost of living.”

In fact, during pre-Budget discussions in 2025, retired EPS employees had even demanded an increase to ₹7,500 per month, but there was no official assurance given at the time.

Financial Feasibility Under Review

The Labour Ministry is currently evaluating the additional cost burden that would result from increasing the minimum pension. In FY24, the ministry spent ₹1,223 crore on providing minimum pensions — a 26% increase over the ₹970 crore spent in FY23.

Of the 7.85 million pensioners under EPS, more than 3.66 million currently receive only ₹1,000 per month. Raising this to ₹3,000 could significantly improve their quality of life.

Since September 2014, the central government has been providing a grant-in-aid to cover the difference between the guaranteed ₹1,000 pension and the actual amount received by members, if it was lower.

Expert Reactions

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

Sandeep Vempati, economist and BJP spokesperson, pointed out that inflation has surged by 72% between March 2014 and March 2025, as measured by the CPI. He also emphasized that the International Labour Organisation (ILO) recommends linking pensions to inflation, which adds weight to the demand for this hike.

Challenges Ahead

While this proposed increase has generated optimism, fiscal constraints and global economic uncertainty continue to be factors that may impact the scale and timing of the pension hike. The final decision is expected after a thorough financial review and consultation with the finance ministry.

If implemented, this move could significantly benefit India’s vast retired workforce, ensuring more dignified post-retirement life.