Pension Scheme Inflation Link Rejection: MoS Shobha Karandlaje's Insights

Monday, 29 July 2024, 15:01

The Employees Pension Scheme 95, a defined contribution and defined benefit system, will not link monthly pensions to inflation. Minister of State Shobha Karandlaje concluded that such a linkage was not feasible for a funded scheme like EPS-1995, which could lead to open-ended benefits tied to a variable inflation index. This decision indicates continued focus on managing the sustainability of pension funds against unpredictable inflation rates.
Economictimes
Pension Scheme Inflation Link Rejection: MoS Shobha Karandlaje's Insights

Overview of the Employees Pension Scheme 95

The Employees Pension Scheme 95 serves as a crucial retirement plan for employees, balancing between defined contribution and defined benefit structures.

MoS Shobha Karandlaje's Statement

In a recent written response to the Lok Sabha, Minister of State Shobha Karandlaje stated that the proposal to link employee pensions to the cost of living index was reviewed but deemed unfeasible.

Implications of Linking Pensions to Inflation

  • Benefit Structure: Maintaining a balance without an inflation-linked benefit is essential for sustainability.
  • Variable Inflation: The proposal raised concerns regarding the unpredictability of inflation rates.

Conclusion

This decision aims to ensure that the benefits do not remain open-ended and are manageable within the funded scheme's framework, reflecting an anticipated control over pension fund allocations.


This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.


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