EPFO proposes pension option for subscribers after 60
22 October 2019
The Employees’ Provident Fund Organisation (EPFO) has proposed monthly pension option to subscribers and raising the superannuation age to 60 from 58 at present to be eligible for the pension scheme.
This would bring EPFO on a par with the National Pension Scheme (NPS) in terms of returns on investments.
Also, according to the EPFO, raising the age limit will cut the pension fund’s deficit by Rs30,000 crore and will increase benefits to members since they would have two additional years of service.
The proposal to increase the superannuation age for drawing pension under the scheme is expected to help a beneficiary grow his/her pension kitty, while also aiding the pension fund in reducing its deficit.
To make the pension plan attractive, the EPFO could also offer incentives, such as additional bonus, to those who agree to draw their pension at 60.
“Age of superannuation, which is 58 years, needs to be increased to 60 years as most of the pension funds world over, are giving pension after 65 years,” the retirement fund manager said in amendments proposed to the EPF Act, 1952.
EPFO is of the view that the pensionable age should be aligned to the government pension scheme and the National Pension System, where the superannuation age is 60 years.
The proposal will be presented to the EPFO’s Central Board of Trustees at the next meeting, which is likely in November.
As per the Employees’ Pension Scheme, 1995, an employer contributes 8.33 per cent of an employee’s salary to pension, with a ceiling on pensionable salary at Rs15,000.