Earlier there was no provision for restoration of commuted pension and the pensioners continued to receive reduced pension on account of commutation lifelong.
Pensioners Latest News: On the recommendation of the Central Board of Trustees (EPFO), the Government of India 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. This is a historical step for the benefit of pensioners under EPS-95.
EPFO has released Rs 868 crore pension along with Rs 105 crore arrear on account of the restoration of commuted value of the pension.
Earlier in August 2019, the Central Board of Trustees (CBT) of the Employee Provident Fund had approved a proposal for the restoration of commuted value of the pension to the Pensioners after 15 years of drawing commutation under the EPS 1995 scheme. The move is expected to benefit over 6 lakh pensioners in their retirement.
Essentially, on retirement, if the employee opts for commutation of pension, a portion is paid as a lump sum to the pensioner while on the balance the pension begins. In simple terms, commutation means a lump sum payment in lieu of periodic payments of pension. In such a case, the amount of pension will be lower than the amount of pension without any commutation. Now, as per the new pension rules, the original amount of pension after 15 years equal to the same amount as it would have been without commutation.
In the EPS 1995 scheme, an employee does not contribute directly. While 12 per cent of the employee’s basic salary goes directly towards EPF, 8.33 per cent of the employer’s share ( out of 12 per cent of employer share) goes into the employee’s EPS 95. The amount that goes into EPS 95 is capped at Rs 1250 a month as the pensionable salary is also capped at Rs 15,000 a month. An employee can withdraw the amount that was diverted to EPS anytime on leaving the job but only before completion of 10 years. Else, the employee gets a lifetime pension only if he or she is a member of EPS95 for at least ten continuous years of service. From the age of 58, the pensioner starts getting pension after submitting Form 10-D to the Employees’ Provident Fund Organisation( EPFO).