NEW DELHI: The Employees’ Provident Fund Organisation (EPFO) will start giving out full pensions from May to those who opted for commutation at the time of retirement.
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.
The full pension is restored after some time, 15 years in this case. The government, in February, had notified the restoration.
The move will benefit 6,30,000 pensioners every month, although it will cost the government Rs 1,500 crore at a time when it is facing a resource crunch due to the Covid-19 virus outbreak and the related nationwide lockdown that has hurt the economy.
EPFO is the social security organisation under the labour ministry that administers the Employees’ Provident Fund scheme and Employees’ Pension Scheme. Following the virus outbreak, the EPFO 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, sources told.
“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 said.
This will substantially increase pensions of those EPFO subscribers who had retired prior to September 26, 2008 and had opted for partial commutation of pension. This means an individual who retired on, say April 1, 2005, would be eligible to receive the benefit of higher pension after 15 years, from April 1, 2020.
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 -commuted pension-while the remaining two-thirds was paid out as monthly pension during his/her lifetime.
As per current EPF rules, EPFO members are not eligible for the commutation benefit.
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 for the above mentioned employees.
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