EPFO board recommends new formula for boosting pension payout

NEW DELHI: A small change in rules can help crores of Employees Pension Scheme subscribers earn more after retirement.
The Employees Provident Fund Organization’s (EPFO) central board of trustees has recommended that the pension should be based on the average salary for the past 30 months, instead of the current stipulation of 60 months. As a result, the payout is expected to increase although it will add to EPFO’s burden which already has to deal with a deficit, estimated at Rs 8,000 crore.
Sources, however, told TOI that it is just a recommendation at this stage and will have to be notified by the government for subscribers to benefit. From September 1, EPFO had changed the formula for determining the pensionable salary by calculating the average monthly pay for 60 months instead of 12.
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If notified, the step will counter EPFO’s attempts to restrict withdrawals. Against the current norm of allowing pension payment at 58 years, the CBT has now agreed to allow subscribers to defer it by two years. For every year of deferred pension, there will be a 4% incentive, explained two sources familiar with the decision taken during Wednesday’s meeting of trustees.