6.3 lakh EPFO members to get higher pension from next month

This restoration will substantially increase pensions of those EPFO members who had retired prior to September 26, 2008, and had opted for partial commutation of pension. 

New Delhi: The Employees’ Provident Fund Organisation (EPFO) will start giving out full pensions from May to 6.3 lakh members who had opted for commutation at the time of retirement. The government had notified this restoration in February.

Commutation is an option given to 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 his/her pension as lumpsum while the remaining two-thirds was paid out as monthly pension during his/ her lifetime.

However, the Central Board of Trustees of the EPFO had in a meeting on August 21 last year 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.

According to a report in the Economic Times, the move will cost the government Rs 1,500 crore. This will be an additional burden on the government at a time when it is facing revenue decline due to the Covid-19 virus outbreak and the related nationwide lockdown that has hurt the economy.

Sources told the publication that the retirement body was asked to speed up the process of aligning the software and other infrastructure on priority so that the restored pension could be given out at the earliest.

“While the scheme was notified in February, it took us a few months to make related changes in the software. Now, we are ready to start disbursal,” a senior government official told the business daily.

Worth mentioning here is that restoration will substantially increase pensions of those EPFO members who had retired prior to September 26, 2008, and had opted for partial commutation of pension.

After this restoration, those who retired on April 1, 2005, would first receive the increased pension in May 2020.

It may be noted that pension commutation facility is currently not available for EPFO members.

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