EPFO Pension Latest News: EPS commutation changes to give higher pension to pensioners
EPFO Pension Latest News: More than 6 lakh pensioners likely to get benefitted from the recent change made by the government in the Employees Pension Scheme (EPS), 1995
EPFO Pension Latest News: More than 6 lakh pensioners are likely to benefit from the recent change made by the government in the Employees Pension Scheme (EPS), 1995. On 20 February, the government notified a change in the EPS, according to which, eligible members of Employees' Provident Fund Organisation (EPFO) will get a normal pension if they had opted for commutation of pension.
Let us first understand what does commutation of pension mean and how it will benefit the pensioners and which pensioners will actually benefit from this move.
What is EPFO pension commutation?
A member eligible for pension was allowed to take part in their monthly pension as lumpsum in advance according to the rules governing the EPS. This is called the commutation of pension. As per the previous rules, an employee could commute (or take as lumpsum) up to one-third of the monthly pension and receive 100 times the amount as a lump sum and opt for a reduced monthly pension for the rest of the life.
Let us understand this with an example. Assume that a person is drawing a pension of Rs 3000 per month and he decides to go for a commutation of pension, then the commuted value that he will get a lump sum will be 3000 X ⅓ X 100 = equals to Rs 100000. The monthly pension will get reduced to two-third that is 3000 X ⅔ equals to Rs 2000.
Those who opt for EPFO pension commutation will find their pension reduced to two-thirds of the amount.
However, the option of commutation of pension was withdrawn in September 2008 so one could not opt for a commutation of pension that is take part in their monthly pension as a lump sum.
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Who will benefit from EPFO pension commutation?
So, now as per the new notification those who opted for EPFO pension commutation prior to September 2008 (when the option of commutation of pension was withdrawn), will get increased pension after the completion of 15 years from the date of such commutation.
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