Raising Of Wage Ceiling Under Employees' Pension Scheme
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Regarding 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.6500/- which was in operation since 01.06.2001. Lots of deliberation has been made regarding 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 over due. As reported the pensionable salary is to be worked out based on the average salary of past 60 months while the existing pensionable salary is worked out based on 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 to a great relief to the pension members.
2) Under the existing EPS’95, weightage of two years is added to the pensionable service who complete 20years reckoning from the date of 16.11.1995. It should be noted that the member who completes 20 years as on 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 learnt was based on the Central Civil Service Pension Rules,1972 according to which the maximum qualifying service for central govt. 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 benefit 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, who wants to avail after completion of 50 yrs. and before completion of 58 years, has been reduced @ 4% w.e.f. 26.09.2008 instead of 3% notified earlier, for every year falling short of 58 yrs. .
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 on 16.11.1995 and completes 58 years on 31.12.2015, his pension for past service is calculated 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 monthly pension by paying 100 times of 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 organization is 58 years. If the eligibility of 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 for superannuation pension.
Therefore, the hon’ble Central Board of Trustees of EPFO is earnestly requested to see that the EPS members on exit on retirement/ superannuaton 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.