As per the recent change in Employees Pension Scheme (EPS) 1995 notified by the government on February 20 as many as 6 lakh pensioners are said to benefit. Accordingly, eligible members of EPFO on opting for pension commutation will get normal pension. Let us understand in detail how the move or change in the scheme would benefit and whom?
What is Commutation of Pension?
The EPS scheme allowed members eligible to receive pension to take their monthly pension amount as lumpsum in advance. This is called pension commutation. In accordance with the earlier rules, an employee could take up to one-third of the monthly pension and avail 100 times of the amount as lumpsum and thereafter go for lowered monthly pension for the remaining life.
Say for instance: If the pension amount is Rs. 6000 and the subscriber opted for pension commutation then the amount he or she will get as lump sum will be 1/3 of 6000*100 or Rs. 2,00,000. And there on the monthly pension amount would be 2/3 of 6000 or Rs. 4000.
But since September 2008, commutation of pension i.e. the option to take monthly pension as lump sum was not available.
EPS Subscribers who Opted for Pension Commutation to Benefit
So with the change, EPFO subscribers who opted for pension commutation before September 2008 i.e. when the facility was withdrawn will get a higher pension amount after the term of 15 years gets completed from the date of such commutation.
This is to say that those subscribers who opted for commutation in August 2008 will get increased pension from 2023. And while those who had applied for the option as early as January 2005 or even before would have completed the 15 years term and hence would be eligible to get higher monthly pension.