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In a move that could bring immense relief to millions of retired workers, the central government is reportedly considering a significant increase in the minimum pension amount provided under the Employees’ Pension Scheme (EPS). If approved, the pension may rise threefold—from the current ₹1,000 per month to ₹3,000—offering much-needed financial support to elderly citizens struggling with rising inflation.

What Is EPS and How It Works?

The Employees’ Pension Scheme (EPS) is a social security initiative managed by the Employees' Provident Fund Organisation (EPFO). It provides a fixed monthly pension to workers in the organized sector after retirement, offering them a reliable source of income in their old age.

Under this scheme, a portion of the employer's contribution to the employee’s Provident Fund is directed to the pension fund. Specifically, 8.33% of the employer’s contribution goes into EPS, while the remaining 3.67% is allocated to the EPF (Employees’ Provident Fund).

Why Is the Hike in Pension Being Considered?

Over the past decade, the cost of living has risen significantly, making it nearly impossible for retirees to survive on a ₹1,000 monthly pension. According to data, consumer price inflation (CPI) has surged by 72% in the last 11 years, putting immense pressure on pensioners dependent on minimal financial aid.

Currently, there are around 78.5 lakh pensioners under EPS, and 36.6 lakh of them rely solely on the minimum pension of ₹1,000 per month. A proposed hike to ₹3,000 would not only address inflationary challenges but also provide dignity and financial stability to millions of retirees.

Past Proposals and Government Response

This is not the first time the idea of increasing the EPS pension has been floated. In 2020, the Ministry of Labour recommended raising the pension amount to ₹2,000. However, the proposal did not receive approval from the Finance Ministry.

Ahead of the 2025 Union Budget, pensioners had demanded an increase to ₹7,500 per month. Despite their appeals, no formal assurance was provided by the government at the time.

Now, with growing public pressure and the changing economic climate, the Labour Ministry is reportedly reassessing the financial feasibility of this long-awaited pension hike. In the financial year 2023-24, the government spent approximately ₹1,223 crore on minimum EPS pensions—a 26% increase compared to the previous year. Experts believe that increasing this amount further could still be sustainable with proper budget allocation.

Experts Weigh In on the Potential Impact

Financial experts and economists are largely in favor of the proposed increase. Akhil Chandna, Partner at Grant Thornton, stated that enhancing the pension amount would provide substantial relief to retired employees from low-income groups and improve their overall quality of life.

BJP-affiliated economist Sandeep Vempati emphasized that the International Labour Organization (ILO) recommends linking pensions to inflation. “If the government raises the EPS minimum pension to ₹3,000, it will be a game-changer for lakhs of pensioners. In today’s inflation-driven economy, this move could help ensure a life of dignity for many,” he noted.

What’s Next?

While the proposal is still under review, sources suggest that the decision could be implemented in the coming months. If approved, the pension increase could benefit crores of senior citizens, especially those from the working-class segment, who currently receive insufficient post-retirement financial support.

This potential reform signals a positive shift in the government’s approach to social welfare for retirees and may be seen as a step toward creating a more secure and inclusive retirement ecosystem.

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