Good Social Security System
The issue(not the court case) of pension on higher contribution is for following factors
1. Equity & Adequate Benefit to the concerned employees?
2. IF the formula that decide benefit is sustainable or not?
1. How to decide equity? IF the formula that decide benefit is sustainable or not?
It can only be decided calculating the amount contributed on behalf of employee, amount calculated after years of investment as part of pension fund and amount of benefit that the employee will be getting in average years of life after retirement.
To calculate these, EPFO should have enough transparency for a common man to compare these 3 values. if is not sustainable
for higher wages, it means the formula was not made considering it as balanced scheme and the formula may have been developed like a social assistance scheme where the govt is in loss for each new member.
2. As per basic definition social security should be Equitable and adequate. What is adequate benefit?
IMHO, The amount should be enough for a member to have similar lifestyle after retirement that a pensioner was having during his employment. The benefit should be safe against inflation (over long term) and against market condition at the time of calculation of base benefit. EPS does not satisfy all three points. So far, it seems, it is not a good scheme.
If formula is not sustainable(it is loss making) and not adequate, is the organization thinking recommendation in direction to change the formula or stop the EPS?
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