EPFO approves changes in Employees' Pension Scheme to restore commutation of pension; move will benefit 6.3 lakh pensioners

Providing relief to 6.3 lakh pensioners, retirement fund body EPFO has approved a proposal to restore commutation, or advance part-withdrawal, under the Employees' Pension Scheme

Press Trust of India August 22, 2019 17:29:32 IST
EPFO approves changes in Employees' Pension Scheme to restore commutation of pension; move will benefit 6.3 lakh pensioners
  • The move would benefit the pensioners who had opted for commutation and got a lump-sum amount at the time of retirement before 2009. The provision for commutation of pension was withdrawn by the EPFO in 2009

  • Under the commutation, monthly pension used to be cut by one-third for the next 15 years and the reduced amount would be given in lump sum

  • After the 15 years, the pensioners were entitled to get the full pension

New Delhi: Providing relief to 6.3 lakh pensioners, retirement fund body EPFO has approved a proposal to restore commutation, or advance part-withdrawal, under the Employees' Pension Scheme.

The move would benefit the pensioners who had opted for commutation and got a lump-sum amount at the time of retirement before 2009. The provision for commutation of pension was withdrawn by the EPFO in 2009.

Under the commutation, monthly pension used to be cut by one-third for the next 15 years and the reduced amount would be given in lump sum. After the 15 years, the pensioners were entitled to get the full pension.

"In a major decision, the (EPFO's apex decision-making body) Central Board of Trustees (CBT) in a meeting held at Hyderabad on 21 August , 2019, approved proposal to recommend for amendment in EPS-95 for restoration of commuted value of pension to pensioners after 15 years of drawing commutation, which will benefit about 6.3 lakh pensioners," according to a statement by the EPFO.

EPFO approves changes in Employees Pension Scheme to restore commutation of pension move will benefit 63 lakh pensioners

Representational image. Reuters.

Bharatiya Mazdoor Sangh General Secretary Virjesh Upadhyay told PTI that there was a demand for restoration of commutation of pension. "Earlier under EPS-95 (Employees' Pension Scheme, 1995), members were able to commute one-third of their pension for 10 years, which was restored after 15 years. This facility is available to government employees."

In the matter of coupon default of IL&FS Ltd, the CBT also nominated three officers of the investment division of EPFO to attend the debenture holders' meeting that may be held in future and if need be, vote on behalf of the CBT.

Moreover, the trustees approved the decision to choose the exchange-traded fund (ETF) manufacturers through public bidding by 31 October, 2019, and extended the term of the present ETF manufacturers (SBI MF and UTI MF) till then.

The CBT also approved the proposal to divide the fund allocation equally (in the ratio of 50:50) between Nifty 50 and Sensex ETFs.

The board also approved the nomination of members from employers' and employees' side in a committee constituted to select and appoint a separate agency or consultant in addition to Crisil, to review the working of portfolio managers, and assist the investment committee in the redemption of ETFs, among others.

The EPFO has a total investment of Rs 2,300 crore in Gujarat State Petroleum Corporation's (GSPC) non-convertible debentures (NCDs).

The CBT has approved the transfer of GSPC NCDs to Gujarat State Investment Ltd, a wholly-owned subsidiary of the Government of Gujarat and a better-rated company which had made an offer to take over the debt of GSPC with budgetary support of the Gujarat government.

The CBT also approved the decision to withhold any further investment in private sector companies' bonds and to compulsorily consider one of the two required ratings necessarily from Crisil, Care, Icra and India Ratings for investments in the public sector undertaking bonds category.

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