The Government recently made changes to the Employees’ Pension Scheme (EPS), 1995, as a result of which more than six lakh pensioners may benefit. As per the Government notification, eligible members of the Employees’ Provident Fund Organisation (EPFO) will get normal pension if they opted for commutation of pension.
According to the previous EPS rules, members eligible for pension were permitted to commute up to one third of their monthly pension in advance. In other words, they could withdraw part of their monthly pension in advance, as a lumpsum amount. They would receive 100 times the amount as lumpsum and opt for reduced monthly pension for the rest of the life.
For instance, if an individual’s pension came to Rs 6,000 and that individual happened to opt for commutation of pension, then he would get 6000x?x100, that is, Rs 2,00,000 as lumpsum. However, his monthly pension would decrease to two thirds, that is, 6000x?, that is, Rs 4,000, for the entire life.
In 2008, however, the option to commute pension was withdrawn.
With the new notification coming into force, those who opted for commutation prior to September 2008, will receive increased pension, as calculated above, post completion of 15 years from the date of such commutation.
Employees who had been getting two-thirds pension owing to commutation will now be eligible for the full pension after 15 years.