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Subscribers say there is surplus money in EPS

GS paper 3

Syllabus: Issues related to mobilization of resources, employment, EPS, Government budgeting etc


Direction: UPSC may ask about EPS Scheme etc

Source: The Hindu



  • Employees and pensioners in the Supreme Court on Thursday tore into the controversial amendments on “determination of pensionable salary” introduced into the Employees Pension Scheme (EPS) of 1995.
  • Surplus money in the scheme: There is surplus money in the scheme. Government and EPFO are earning as interest is more than what they are paying as monthly pension, lawyer submitted.
  • Clause 11(3) of the EPS-1995: The dispute revolved around the controversial amendments made to Clause 11(3) of the EPS-1995.
    • The Kerala High Court had struck down the amendments, following which the EPFO had appealed in the Supreme Court.
  • Extension of period of calculation of average salary from 12 months to 60 months: The pensionable salary was originally an average of 12 months’ pay before the date of the employee’s exit from the EPS.
    • The amendments had extended the period of calculation of average salary from 12 months to 60 months.
  • Further contribution of 1.16%: The amendment created an additional obligation for employees whose salaries exceeded the ₹15,000 ceiling, they had to contribute a further 1.16% of their salary in addition to their Employees Provident Fund contribution.
    • The 1.16% contribution is contrary to the provisions of the Employees Provident Fund Act itself.


Employees Pension Scheme (EPS):

  • It is a social security scheme that was launched in 1995.
  • The scheme, provided by EPFO, makes provisions for pensions for the employees in the organized sector after the retirement at the age of 58 years.
  • Employees who are members of EPF automatically become members of EPS.
  • Both employer and employee contribute 12% of employee’s monthly salary (basic wages plus dearness allowance) to the Employees’ Provident Fund (EPF) scheme.
  • EPF scheme is mandatory for employees who draw a basic wage of Rs. 15,000 per month.
  • Of the employer’s share of 12 %, 8.33 % is diverted towards the EPS.
  • Central Govt. also contributes 1.16% of employees’ monthly salary.


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Practice Questions:

Q. Performance of welfare schemes that are implemented for vulnerable sections is not so effective due to absence of their awareness and active involvement at all stages of the policy process. Discuss(UPSC 2019)

With reference to Employment Provident Fund(EPF) Scheme, consider the following statements:

    1. EPF is mandatory for the employees who draw a basic salary of Rs 30,000 per month.
    2. Both employer and employee contribute 12% of an employee’s monthly salary.

Which of the statements given above is/are not correct:

a. 1 only

b. 2 only

c. Both 1 and 2

d. Neither 1 nor 2

Ans: (a)


Refer to table above