New Delhi: Good news for EPFO pensioners! The Employees’ Provident Fund Organisation (EPFO) released Rs 868 crore pension along with Rs 105 crore arrear on account of the restoration of commuted value of the pension. On the recommendation of the Central Board of Trustees (EPFO), the government accepted one of the long-standing demands of workers to allow restoration of commuted value of pension after 15 years.
Earlier there was no provision for restoration of commuted pension and the pensioners continued to receive reduced pension on account of commutation lifelong. Tho move will benefit over 65 lakhs EPFO pensioners who are catered through EPFO’s 135 regional offices. EPFO officers and staff processed pension payment for May 2020 despite the Covid-19 crisis to ensure credit of pension in the bank account of pensioners is on schedule.
The government had notified this restoration in February. Commutation is an option given to EPFO pensioners to convert a part of their monthly pension into an upfront lumpsum payment at the time of retirement. As per EPS rules, an EPFO member who retired before September 26, 2008, could get a maximum one-third of their pension as lumpsum while the remaining two-thirds was paid out as monthly pension during their lifetime.
However, the Central Board of Trustees had a meeting on August 21 last year where they approved the proposal to restore the full monthly pension of those who retired prior to September 26, 2008, and had opted for pension commutation, after 15 years.
EPF contribution cut impact on pension:
It is worth noting the recently, Finance Minister Nirmala Sitharaman announced a reduction of EPF contribution from 12 per cent to 10 per cent for both employer and employees as part of the Atmanirbhar Bharat Package as a means to provide relief to employers and also to increase the take-home pay of employees.
However, since the EPS contribution (8.33% of wages subject to a ceiling of 15,000) is diverted from the employer’s share of EPF contributions. The reduced rate of EPF contributions to 10% will not reduce the pension contributions or benefits