600,000 pensioners to gain as EPFO's commutation come into play on Jan 1

The labour ministry will enforce the retirement fund body EPFO's decision to restore pension commutation, or advance part-withdrawal, under the Employees' Pension Scheme from January 1, 2020, a move which will benefit 630,000 pensioners, a source said.

These 630,000 pensioners had opted for commutation of their pension and got a lump sum amount at the time of retirement from their pension accumulations or fund before 2009. The provision for commutation of pension was withdrawn by the EPFO in 2009.

"The labour ministry would issue a notification on January 1, 2020, to implement the Employees' Provident Fund Organisation's (EPFO) decision to restore commutation, or advance part-withdrawal, under the Employees' Pension Scheme," the source said.

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

The EPFO's apex decision making body the Central Board of Trustees headed by the labour minister, had approved the proposal to restore commutation of pension for 630,000 pensioners opted for the benefit, in its meeting held on August 21, 2019.

An EPFO panel had recommend for amendment in EPS-95 (Employees' Pension Scheme 19995) for restoration of commuted value of pension to pensioners after 15 years of drawing commutation.

There was a demand for restoration of commutation of pension. Earlier under EPS-95 members were allowed to commute one-third of their pension for 10 years, which was restored after 15 years. This facility is available to government employees.