The Hindu : National : Pension commutation withdrawn

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Wednesday, Nov 05, 2008
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National

Pension commutation withdrawn

Special Correspondent

NEW DELHI: The Union Labour Ministry has amended the pension scheme rules under the Employees Provident Fund (EPF) and Miscellaneous Provisions Act, 1952 to the effect that pensioners will not be allowed to commute one-third of their pension fund – contributed by them under the EPF – at the time of their retirement.

A part of the EPF – 8.33 per cent – had been going to the individual’s pension fund scheme since 1995.

Previously, an employee could draw one-third of his accumulated pension fund in cash before retirement to meet major domestic expenses, including children’s marriage while the remaining two-thirds would be included in his monthly pension.

Now this, facility stands withdrawn and the entire pension fund amount will be adjusted in his monthly pension.

The amendments also increase the reduction in pension to those who retired before the stipulated age of 58 years from 3 per cent of the total quantum to 4 per cent.

Self-sustaining

The EPF-linked pension scheme was self-sustaining because of high rates of interest with no contributions from the government.

But over the years the rate had been falling and the government had to either contribute to make the scheme sustainable or curtail the benefits.

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