Implementation of Proposed Salary Ceiling under Employees’ Pension Scheme, 1995
It is heartening to learn that the EPFO has decided to raise the monthly wage ceiling to Rs. 15,000/- from the existing ceiling of Rs. 6,500/-, which was in operation since 01.06.2001. Lots of deliberation has been made regarding the methodology of calculation of pension while implementing the revised pension scheme from the next financial year 2014-15.
Through this column, we would like to draw the kind attention of all concerned to the following:
1) The amendment was long overdue. As reported, the pensionable salary is to be worked out based on the average salary of the past 60 months, while the existing pensionable salary is worked out based on the average of the last 12 months on the date of superannuation. As suggested by Shri D.L. Sachdev, a trustee of CBT, the average salary of 24 months will be reasonable and a great relief to the pension members.
2) Under the existing EPS’95, a weightage of two years is added to the pensionable service for those who complete 20 years, reckoning from the date of 16.11.1995. It should be noted that the member who completes 20 years as of 30.11.2015 will be given the weightage of two years. The ill-fated members who dream of earning the weightage of two years on completion of 20 years of pensionable service will have to forego the same if the weightage is curtailed under the revised ceiling.
3) The pensionable salary, as learned, was based on the Central Civil Service Pension Rules, 1972, according to which the maximum qualifying service for central government employees is 33 years (66 half years) while evolving the Monthly Member Pension (MMP). Thus, the denominator/divisor 70 in the MMP is arrived at 33x2=66 plus weightage of 2yrsx2=70. While the pension members who had already exited from the scheme 15 years back or so were given pension benefits based on the denominator 70, although they could not get the opportunity of availing the weightage of two years.
4) Already, the quantum of early pension, for those who want to avail after completion of 50 years and before completion of 58 years, has been reduced by 4% w.e.f. 26.09.2008 instead of 3% notified earlier, for every year falling short of 58 years.
5) Also, the factor for computation of Past Service Benefit (under the ceased Family Pension Scheme) for the existing members has been drastically reduced in Table ‘B’ of the scheme vide amendment (Subs. By GSR 438(E) dated 10.06.2008). For example, for a member who has past service of 20 years as of 16.11.1995 and completes 58 years on 31.12.2015, his pension for past service is calculated by multiplying the quantum of past service benefit by 4.843 (for less than 21 years) instead of 7.083 of the original Table ‘B’ of EPS’95.
6) Commutation of one-third of the monthly pension by paying 100 times of the original monthly pension has also been discontinued in the amended EPS scheme from 26.09.2008.
7) It may be mentioned that the superannuation age in many organizations is 58 years. If the eligibility for superannuation pension is fixed at 60 years as thought of now, then a member, after exit from an establishment, will have to wait for another two years to be entitled to superannuation pension.
Therefore, the hon’ble Central Board of Trustees of EPFO is earnestly requested to ensure that the EPS members, on exit on retirement/superannuation from the factories and establishments, are not deprived of their following legitimate benefits:
i) At least the average salary of 24 months is taken into consideration for pensionable salary for the superannuation pension on attaining the age of 58 years.
ii) Weightage of two years is given on completion of 20 years of pensionable service.
Regards,
N.G. Pathak
A Pension Member
From India
Acknowledge(0)
Amend(0)
It is heartening to learn that the EPFO has decided to raise the monthly wage ceiling to Rs. 15,000/- from the existing ceiling of Rs. 6,500/-, which was in operation since 01.06.2001. Lots of deliberation has been made regarding the methodology of calculation of pension while implementing the revised pension scheme from the next financial year 2014-15.
Through this column, we would like to draw the kind attention of all concerned to the following:
1) The amendment was long overdue. As reported, the pensionable salary is to be worked out based on the average salary of the past 60 months, while the existing pensionable salary is worked out based on the average of the last 12 months on the date of superannuation. As suggested by Shri D.L. Sachdev, a trustee of CBT, the average salary of 24 months will be reasonable and a great relief to the pension members.
2) Under the existing EPS’95, a weightage of two years is added to the pensionable service for those who complete 20 years, reckoning from the date of 16.11.1995. It should be noted that the member who completes 20 years as of 30.11.2015 will be given the weightage of two years. The ill-fated members who dream of earning the weightage of two years on completion of 20 years of pensionable service will have to forego the same if the weightage is curtailed under the revised ceiling.
3) The pensionable salary, as learned, was based on the Central Civil Service Pension Rules, 1972, according to which the maximum qualifying service for central government employees is 33 years (66 half years) while evolving the Monthly Member Pension (MMP). Thus, the denominator/divisor 70 in the MMP is arrived at 33x2=66 plus weightage of 2yrsx2=70. While the pension members who had already exited from the scheme 15 years back or so were given pension benefits based on the denominator 70, although they could not get the opportunity of availing the weightage of two years.
4) Already, the quantum of early pension, for those who want to avail after completion of 50 years and before completion of 58 years, has been reduced by 4% w.e.f. 26.09.2008 instead of 3% notified earlier, for every year falling short of 58 years.
5) Also, the factor for computation of Past Service Benefit (under the ceased Family Pension Scheme) for the existing members has been drastically reduced in Table ‘B’ of the scheme vide amendment (Subs. By GSR 438(E) dated 10.06.2008). For example, for a member who has past service of 20 years as of 16.11.1995 and completes 58 years on 31.12.2015, his pension for past service is calculated by multiplying the quantum of past service benefit by 4.843 (for less than 21 years) instead of 7.083 of the original Table ‘B’ of EPS’95.
6) Commutation of one-third of the monthly pension by paying 100 times of the original monthly pension has also been discontinued in the amended EPS scheme from 26.09.2008.
7) It may be mentioned that the superannuation age in many organizations is 58 years. If the eligibility for superannuation pension is fixed at 60 years as thought of now, then a member, after exit from an establishment, will have to wait for another two years to be entitled to superannuation pension.
Therefore, the hon’ble Central Board of Trustees of EPFO is earnestly requested to ensure that the EPS members, on exit on retirement/superannuation from the factories and establishments, are not deprived of their following legitimate benefits:
i) At least the average salary of 24 months is taken into consideration for pensionable salary for the superannuation pension on attaining the age of 58 years.
ii) Weightage of two years is given on completion of 20 years of pensionable service.
Regards,
N.G. Pathak
A Pension Member
From India
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Amendment in Employees Pension Scheme, 1995.pdf