Tag: pension

8th Pay Commission Pension Rules: Demand for Faster Restoration of Commuted Pension

Central government pensioners and employee organisations are seeking a reduction in the 15-year period for restoration of commuted pension. Several associations have urged the 8th Pay Commission to recommend restoration after 10 to 12 years, arguing that the existing rule is based on financial and actuarial assumptions that are several decades old.

What is pension commutation and why is the 15-year rule being challenged?

Central government employees can commute up to 40% of their basic pension at retirement and receive the commuted amount as a lump sum. In return, the commuted portion is deducted from their monthly pension. Under the existing rules, the deducted pension is restored after 15 years.

Employee and pensioner organisations argue that this 15-year restoration period needs to be reconsidered because the financial and demographic conditions used when the framework was introduced have changed significantly.

The National Council of the Joint Consultative Machinery (NC-JCM), All India Defence Employees’ Federation (AIDEF) and Federation of National Postal Organisations (FNPO) have sought an 11-year restoration period. The Indian Railways’ Technical Supervisors’ Association has proposed 12 years, while the All India New Pension Scheme Employees Federation has sought 10 years. Bharat Pensioners Samaj and All Pensioners Association have also recommended 11 years.

Why pensioner bodies want the restoration period reduced

The NC-JCM says the 15-year restoration rule was framed nearly four decades ago using the financial and actuarial parameters prevailing at the time. According to the organisation, changes in interest rates, life expectancy, mortality rates and actuarial risk factors warrant a fresh assessment.

Its illustration for a pensioner aged 61 shows a commutation factor of 8.194. For every ₹100 of monthly pension commuted, the pensioner receives ₹9,833 as the commuted value.

However, the pensioner would forgo ₹12,000 over 10 years through the monthly deduction of ₹100. Over 15 years, the total deduction would rise to ₹18,000.

Based on this calculation, the NC-JCM argues that the commuted amount is effectively recovered in about 10 years and that deductions beyond this period result in excess recovery. It has therefore recommended restoration after 11 years.

Bharat Pensioners Samaj has made a similar argument. Its data compares parameters from 1986, 2008 and 2023, highlighting lower interest rates, higher life expectancy and lower mortality rates. It estimates the recovery period at around 11.25 years based on the latest parameters cited in its memorandum.

The organisation has also argued that while mortality tables are periodically revised to reflect changing longevity patterns, the commutation framework for government pensioners has not been updated adequately.

How could a shorter restoration period benefit pensioners?

The financial impact can be significant for pensioners with a higher basic pension.

For example, Bharat Pensioners Samaj has calculated the impact for a pensioner receiving a basic pension of ₹35,000 per month and commuting 40%, or ₹14,000, of the pension.

Under an 11-year restoration period, the pension deduction would continue for 132 months, resulting in total deductions of ₹18.48 lakh. Under the existing 15-year period, the deduction would continue for 180 months, taking the total deductions to ₹25.20 lakh.

The difference is ₹6.72 lakh, representing the additional ₹14,000 deducted for 48 months if restoration takes 15 years instead of 11 years.

The organisations have therefore asked the 8th Pay Commission to review Rule 10A of the Central Civil Services (Commutation of Pension) Rules, 1981. They have also sought revision of the commutation tables using updated actuarial, demographic and financial data.

The final recommendation of the 8th Pay Commission will determine whether the government accepts a shorter restoration period. Until any rule change is notified, the existing 15-year restoration framework continues to apply.

EPS-95 Pension Hike: Will ₹1,000 Increase to ₹7,500? Government Response

The demand to increase the minimum pension under the Employees’ Pension Scheme (EPS), 1995, from ₹1,000 to ₹7,500 has once again come into focus after the issue was raised in the Lok Sabha on 10 August. However, the government has not announced any increase in the minimum pension or indicated that the ₹7,500 demand has been approved.

The issue was raised by Lok Sabha MP Ramvir Singh Bidhuri, who asked whether the government plans to increase the minimum EPS-95 pension from ₹1,000 to ₹7,500 per month. He also sought details on pensioners covered under EPS-1995 and beneficiaries receiving higher pension following the Supreme Court’s ruling on pension on higher wages.

In her response, Minister of State for Labour and Employment Shobha Karandlaje said the government is currently providing a minimum pension of ₹1,000 per month to EPS-1995 pensioners through budgetary support. The government did not announce a hike to ₹7,500 in its response.

The latest parliamentary development comes days after the EPS-95 National Agitation Committee staged a protest in New Delhi on 5 August, demanding that the minimum pension be raised to ₹7,500. The pensioners have argued that the existing ₹1,000 monthly pension is inadequate amid the rising cost of living.

Why has the government not announced a ₹7,500 EPS pension?

According to the government’s response, the Employees’ Pension Fund corpus comprises an employer contribution of 8.33% of wages and a Central government contribution of 1.16% of wages, subject to the ₹15,000 monthly wage ceiling. The government said all benefits under the scheme are paid from these accumulations and that the fund is valued annually as mandated under EPS-1995.

The government is also providing the ₹1,000 minimum pension through additional budgetary support. This support is over and above the 1.16% contribution made by the Centre towards EPS, according to the Labour Ministry’s response.

The government said it is committed to providing robust social security coverage to EPFO members while taking into account the sustainability of the pension fund and future liabilities. Its latest response, therefore, does not signal an immediate increase in the minimum EPS pension to ₹7,500.

For pensioners, the key takeaway is that ₹7,500 remains a demand and not the new minimum pension. The minimum EPS pension continues to be ₹1,000 per month for now.

85.85 lakh pensioners receive EPS pension

As of 31 March 2026, 85,84,604 pensioners were receiving monthly pensions under EPS, according to Karandlaje. The total pension amount disbursed under the scheme up to 31 March 2026 stood at ₹15,819.28 crore.

The government also provided an update on pension on higher wages. Under the ₹15,000 monthly wage ceiling, the maximum monthly EPS contribution works out to about ₹1,250, based on the 8.33% employer contribution.

The Supreme Court’s 4 November 2022 judgment allowed eligible employees who had contributed on actual basic salaries above the wage ceiling to opt for pension on higher wages, subject to the applicable conditions. The EPFO subsequently issued directions allowing eligible employees and employers to submit joint options for higher pension.

According to Karandlaje’s response, 1,49,806 Pension Payment Orders (PPOs) for pension on higher wages had been issued to retired applicants following the Supreme Court judgment.

Therefore, there is no confirmed ₹7,500 EPS pension hike yet. The latest government response keeps the existing ₹1,000 minimum pension in place while stressing the need to balance social security with the sustainability of the pension fund and its future liabilities.

8th Pay Commission: Potential Change to 12-Year Pension Commutation Amid Renewed Demands

Pension Commutation: The Long-Standing Demand Ahead of the 8th Pay Commission

As the Terms of Reference (ToR) for the 8th Pay Commission move toward finalisation, the issue of pension commutation has resurfaced, reigniting an age-old demand from employee unions. They have long argued that the duration for the restoration of the commuted portion of the pension should be shortened from 15 years to 12 years. The pressing question now is whether the 8th Pay Commission will heed this demand and if the government will endorse such a recommendation this time around.

What is Pension Commutation?

Upon retirement, central employees have the option to receive up to 40% of their pension in a lump sum, a process known as ‘pension commutation.’ In exchange for this upfront payment, the employee’s monthly pension is reduced by that same percentage. Presently, the commuted pension is restored after a period of 15 years.

History: Recommendations of the 5th Pay Commission and Unfulfilled Demands

The 5th Pay Commission allowed employees to commute their pension from one-third to a maximum of 40% and recommended restoring the commuted pension earlier, after 12 years. However, the government did not accept this suggestion and maintained the 15-year period. The subsequent 6th and 7th Pay Commissions did not see the necessity to propose any amendments to this rule either.

Judicial Standpoint on the Pension Commutation Period

In 1986, the Supreme Court, during the “Common Cause vs Union of India” case, justified the 15-year restoration period. The court noted that while the government could recover the commuted amount within 12 years, the 15-year timeline was established to account for the ‘risk factor’—the chance that an employee could pass away before the full recovery of the commuted amount. This rationale was echoed in a 2019 decision by the Delhi High Court, which upheld the 15-year duration based on similar reasoning. The courts have determined that this matter falls under policy decision-making, a domain in which judiciary intervention is limited.

Current Demands and Expectations from the 8th Pay Commission

The representative bodies of central employees, notably the NC-JCM (National Council of Joint Consultative Machinery), have consistently demanded a reduction of the restoration period from 15 years to 12 years. Their argument hinges on the significant rise in average life expectancy and the acceleration in the government’s recovery of the commuted amount due to changes in the commutation table and interest rates.

For these reasons, employee unions are advocating for this adjustment to be included in the discussions surrounding the 8th Pay Commission.

The Government’s Position on the Pension Commutation Period

The government maintains that the 15-year period is based on expert advice and essential risk considerations. Given that the preceding two pay commissions did not propose any revisions to this timeline, the government remains firm in retaining the 15-year policy.

Conclusion

The demand from pensioners for a reduced restoration period is a long-standing issue that has yet to be addressed satisfactorily. The recommendation for a 12-year restoration period made by the 5th Pay Commission remains unfulfilled. The critical question now is whether the 8th Pay Commission will revisit this concern and if the government will reconsider its stance. Should this change occur, it would provide significant relief for countless pensioners, enabling them to reclaim their full pension three years sooner. However, as it stands, the legal and governmental positions maintain that the restoration of pension commutation will continue to be restricted to a 15-year timeframe.

EPS-95 Pension May Rise 8 Times – 7,500 Monthly Payouts

EPS-95 Pension: In a significant development for pensioners across India, the EPS-95 pension scheme is set for a substantial enhancement, with monthly payouts anticipated to reach ₹7,500 soon. This move is expected to bring much-needed financial relief to numerous retirees who have been awaiting an increase in their pensions.

Anticipating the EPS-95 Pension Increase

The Employees’ Pension Scheme (EPS-95), which has been a lifeline for many retired employees, is poised for a major revamp. This change is set to improve the quality of life for pensioners by increasing their monthly pension benefits, thus helping them meet the rising cost of living.

Key Highlights of the EPS-95 Pension Enhancement
  • Increase in monthly pension payouts to ₹7,500.
  • Improved financial security for retired employees.
  • Potential boost in the purchasing power of pensioners.
  • Implementation expected to roll out soon.

Understanding the Impact on Pensioners

The proposed hike in EPS-95 pension is not just a number; it represents a significant step towards acknowledging the hard work and dedication of retired employees. This increase will likely have a ripple effect on the economy as pensioners gain more financial freedom.

For many, this boost means better health care, the ability to afford essentials, and an overall improved standard of living. Additionally, it aligns with the government’s efforts to uplift the senior citizens of the country.

Benefits to Expect from the EPS-95 Pension Increase

EPS-95 Pension Scheme: A Closer Look

CategoryCurrent PensionProposed Pension
General Pensioners₹4,500₹7,500
Widow Pension₹3,500₹5,000
Disability Pension₹2,500₹4,000
Orphan Pension₹1,500₹2,500

How to Prepare for the New EPS-95 Pension

Pensioners should be proactive in understanding how this increase will affect them personally.

Steps to Take for Benefiting from the EPS-95 Increase

ActionDetails
Verify Pension AccountEnsure your pension account details are up-to-date.
Contact EPFOReach out to the Employee Provident Fund Organisation for queries.
Update Bank InformationConfirm that your bank details are correct.
Seek Financial AdviceConsider consulting a financial advisor for investment planning.
Stay InformedKeep abreast of any further announcements from the government.

Frequently Asked Questions

What is the EPS-95 pension scheme?

The EPS-95 pension scheme is a social security initiative for retired employees, providing them with a monthly pension post-retirement.

  • Who is eligible for the EPS-95 pension?
  • How will the pension increase affect current beneficiaries?
  • When is the new pension increase expected to be implemented?
  • What steps should pensioners take to ensure they receive the increased amount?

As the nation prepares for this significant change, it is crucial for pensioners to stay informed and take necessary actions to benefit from the increased EPS-95 pension. This enhancement marks a progressive step towards supporting the elderly population, ensuring their well-being and financial security.

Stay Updated: Keep an eye out for official notifications from the government regarding the implementation of the new EPS-95 pension rates.

Verify Your Details: Double-check your pension account and bank details to avoid any discrepancies in receiving the enhanced pension.

Contact Authorities: If you have any questions or concerns, don’t hesitate to reach out to the EPFO or your local pension office for assistance.

Plan Ahead: With the increased pension, consider planning your finances and investments to maximize benefits.

Spread the Word: Inform fellow pensioners about the upcoming changes to ensure everyone is prepared for the transition.

Government’s big announcement for government employees

Unified Pension Scheme: If you are a government employee then this news can be special for you. Let us tell you that a big announcement has been made by the central government for all the employees. In this announcement, the government has introduced the Unified Pension Scheme i.e. UPS Pension Scheme in place of New Pension Scheme for government employees. The consent of the Union Cabinet meeting has been taken about this.

The special thing about this scheme is that if an employee works for at least 25 years, then 50 percent of the basic pay of the last 12 months of the job before retirement will be provided as pension. On the other hand, if a pensioner dies, then 60 percent of the pension will be provided to his family. Apart from this, if an employee leaves the job after 10 years, then he will be given Rs 10,000 as pension.

All the information about this decision taken by the cabinet was given by Railway Minister Ashwini Vaishnav. The Railway Minister said that after the implementation of UPS, about 23 lakh central employees will get the benefit. This scheme of the government will be implemented from 1 April 2025 next year. Let us tell you that the government will give the option to the government employees to choose either of the schemes in NPS and UPS.

At the same time, the existing NPS customers will be given the opportunity to choose UPS by the central government. A committee was formed by the same government to reform the NPS under the chairmanship of the then Finance Secretary TV Somanathan. This committee also studied many pensions of the whole country and the world.

Important things about UPS

Let us tell you that the employees were also demanding assured amount. Under UPS, 50 percent assured pension will be provided to the employees after retirement. This will be 50 percent of the average basic pay of 12 months before retirement. In this, all the employees will be provided pension in 25 years of service.

If the employee dies due to any reason, then provision of family pension will be available through this scheme. Under which 60 percent of the pension received will be given to his family. If an employee works for less than 25 years, he will be given Rs 10,000 as pension.

How Employers Can Secure Higher Wage Pensions by January 31

EPFO Extends Deadline for Uploading Pending Wage Details

The Employees’ Provident Fund Organisation (EPFO) has announced an extension of the deadline until January 31, 2025, for employers to upload pending wage details pertaining to over 3.1 lakh applications for pensions based on higher wages. This extension offers a final opportunity for employers who have yet to submit the necessary information for employees seeking pension benefits on their higher wages.

How to Complete the Process

Employers are required to upload wage details for employees whose pension applications are still pending. Additionally, they must address over 4.66 lakh cases where the EPFO has requested further information or clarifications. The deadline for these updates is set for January 15, 2025. Since February 2023, the EPFO has facilitated an online platform for submitting applications for the validation of options or joint options for pension on higher wages.

Why the Extension?

This extension has been implemented following numerous requests from employers and their associations, highlighting the difficulties in submitting wage details for the pending applications. Initially, the facility was set to expire in May 2023, but due to these representations, the deadline has been extended multiple times. Despite these efforts, more than 3.1 lakh applications remain unresolved, prompting the EPFO to provide this final chance to employers.

Employees Pension Scheme (EPS) 1995, Eligibility, Calculation & ITS BENEFITS

The Central Government had launched Employees’ Pension Scheme, 1995 in exercise of the powers conferred by Section 6A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952). The EPS’95 scheme applies to all the employees of factories and other establishments to which the Employees Provident Funds and Miscellaneous Provisions Act, 1952 applies. Employee Pension Scheme (EPS) came into force on 16th November 1995.

The government has, for the first time, started providing a minimum pension of Rs 1,000 per month to the pensioners under EPS, 1995 from September 1, 2014 by providing additional budgetary support keeping the widespread demands although there is no provision in the Scheme for budgetary support

  • Eligibility Criteria:
  1. He should be a member of EPFO.
  2. For availing the pension benefits under the EPS 95 Pension scheme the employee must serve a minimum of 10 years in service.
  3. The age of retirement is 58 years.
  4. Member can also withdraw his/her EPS at a reduced rate from the age of 50 years 
  5. If an employee has completed less than 10 years of service. but more than 6 months’ service, then he/she can withdraw the EPS amount on being unemployed for more than two months
  6. A member’s family also becomes eligible for Pension benefits in case of death of the member while in service.
  • Benefits:

1.EPFO has certain benefits, which are payable to orphans as per the EPS 95 scheme as mentioned below in brief.

  • Pension amount is 75 per cent of monthly widow pension, with minimum of Rs 750 per month, each for two orphans at a time
  • The pension will be paid till 25 years of age
  • The pension will be paid lifelong if the person is suffering from any disability

2. Benefit provided in case of death of an employee, who was a member of the scheme at the time of death – Benefit amount 20 times of the wages. Maximum benefit of 6 lakh.

3. Pension to nominee for entire life paid on death of member, in case there is no family, as defined under EPS’ 95.

4. In case a member is not able to remain in service for 10 years before attaining the age of 58 years, he can withdraw the complete sum at the age of 58 years. It is worth mentioning here that he will not get the monthly pension benefits after retirement.

5. Lifelong pension equal to monthly widow pension paid to dependent father or motheron death of member, provided there is no family or nominee of member.

Note: In case of any details and query, the EPFO members can login to the official website of EPFO at www.epfindia.gov.in

Latest News: The RSS-affiliate trade union BhartiyaMazdoorSangh has urged the government to increase the minimum pension under the Employees Pension Scheme, 1995 to Rs 5,000 a month and link the Ayushman Bharat medical schemes to all EPS-95 pensioners while exempting senior citizens from income tax. The current minimum monthly pension under the EPS 95 is Rs 1,000.

“Ayushman Bharat medical scheme should be extended all EPS 95 pensioners and any hike in minimum pension in EPS 95 should be universal hike to all 65 lakh pensioners,” it said.

How to Check Your EPS Amount

A member can check the amount accumulated in his Employees’ Pension Scheme (EPS) account in his EPF Passbook. The last column in the passbook shows the EPS contribution deposited by the employer every month in the account of the member. The passbook can be downloaded from the EPF Passbook portal after logging into the account using UAN and password.

How is EPS 95 Pension Calculated?

The monthly pension amount an employee receives depends on the pensionable service of the employee and pensionable salary. 

Here is the formula for calculating any member employee’s monthly pension income:

Member’s Monthly Pension = (Pensionable salary x Pensionable Service)/70

  • Pensionable Salary

It is the average monthly salary that an employee receives in the last 60 months before they decide to exit the Employees’ Pension Scheme. This is as per the judgement of the Supreme Court on November 4th 2022. Earlier, it was the average monthly salary of the last 12 months of the employee’s participation in the scheme.

  • Pensionable Service

This refers to the total number of years for which contributions were made to the EPS account. According to the law, pensionable service must be rounded off to the nearest year. This means that in case you serve for 6 months or more, then it will be treated as a year. If it is less than 6 months, the year will not be counted. If you superannuate at the age of 58 years and have served for more than 20 years, then your service tenure will be increased by 2 years. 

Benefits of EPS 95 Pension

Employees who are eligible for EPS pension can avail a number of benefits. Let us take a look at them:

  • Pension From the Age of 58

An EPS member becomes eligible for a pension from the age of 58 as soon as they retire. However, to become eligible for getting a pension, they need to compulsorily contribute for 10 years before turning 58. After retirement, they will receive an EPS pension scheme certificate. This certificate is a must for filling up form 10D to withdraw monthly pension.

  • Pension in Case of Disability

In case a member of EPS becomes disabled completely as well as permanently, then they will receive a monthly pension. This is irrespective of whether they have served for the pensionable period or not. This member will receive a pension starting from the date of permanent disability and for their entire life. 

The employer must deposit funds in this person’s EPS account for at least a month to become eligible for a pension. However, the employee will have to undergo a medical test to prove the fact that they are unfit for the job that they did before becoming disabled.

  • Pension in Case of Employee’s Death

An EPS member’s family will receive family pension benefits in case of death of the employee under 3 circumstances:

  1. If a member completes 10 years of service and dies before the age of 58 years.
  2. In case a member dies after they start receiving a monthly pension.
  3. If a member dies while still serving and the employer has at least once deposited funds into their EPS account.
  • Withdrawal Facility Before Becoming Eligible for Monthly Pension

In case a member of EPS is unable to remain in service for 10 years due to some reason and reaches the age of 58, they can withdraw the entire some they have invested by filling up form 10C. However, in this case, they will not receive any monthly pension.

Disclaimer:Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.