Great news to pensioners at EPFO! The Provident Fund Organization of Employees (EPFO) released Rs 868 crore pension along with Rs 105 crore arrear due to the restoration of the pension’s commuted value. On the advice of the Central Board of Trustees (EPFO), the government approved one of the workers’ long-standing demands to allow the restoration after 15 years of commuted value of the pension.
Previously there was no provision to restore commuted pension, so the pensioners continued to earn decreased pension because of lifetime commutation. More than 65 lakhs of EPFO pensioners who are catered through the 135 regional offices of EPFO will benefit from such change. Following the Covid-19 crisis, EPFO officers and workers approved pension contributions for May 2020 to ensure pension credit in pensioners’ bank accounts remains on budget.
The government had informed in February of this restoration. EPFO pensioners are given the option of converting a portion of their monthly pension into an initial lumpsum payment at the time of retirement. According to the EPS rules, an EPFO member who retired before 26 September 2008 will earn a maximum one-third of their pension as a lump sum while the remaining two-thirds were paid out as a monthly pension over their lifetime. The Central Board of Trustees, however, held a meeting on August 21 last year, approving the plan to restore the full monthly pension to those who retired before September 26, 2008, and after 15 years had opted for pension swapping.
EPF contribution cut impact on pension:
It is worth noting that, as part of the Atmanirbhar Bharat Package, Finance Minister Nirmala Sitharaman declared a reduction in the EPF contribution from 12 per cent to 10 per cent for both employers and workers as a way of providing support to employers and also increasing the employee’s take-home pay. Since the EPS allocation (8.33 per cent of wages subject to a cap of 15,000) is excluded from the employer’s share of EPF contributions, however. The reduced rate of 10 per cent EPF contributions would not decrease pension contributions or benefits.