Govt implements EPFO’s decision to restore pension commutation; 6.3 lakh pensioners to get benefit


The labour ministry has implemented retirement fund body EPFO’s decision to restore pension commutation under the Employees’ Pension Scheme, a move that will benefit 6.3 lakh pensioners.

On February 20, 2020 the ministry notified the decision of the Employees’ Provident Fund Organisation (EPFO) to restore pension of those who opted for commutation of their pension on or before September 25, 2008.However, the option of commutation of pension was withdrawn in September 2008.

As per the EPS, a member eligible for pension was allowed to take part of their monthly pension as lumpsum in advance. This is called commutation of pension.

As per Para 12A of the Employee Pension Scheme, an employee could claim commuted pension (i.e. lump-sum pension) instead of monthly pension. Such commutation was allowed for maximum of 1/3rd of monthly pension. Remaining 2/3rd continued to be received as monthly pension by the employee. For the maximum 1/3rd of monthly pension, on commutation, the employee was eligible for one-time lump-sum benefit of 100 times the monthly pension so commuted. Such commutation under Para 12A of the Pension Scheme was disallowed effective 26 Sep 2008. Now, as per Para 12B, inserted in the Pension Scheme on 20 February 2020, for an employee who had availed commuted pension (i.e. lump-sum pension) under the erstwhile Paragraph 12A, normal full monthly pension will be restored after 15 years.”

The proposal to restore the full monthly pension (for the above mentioned employees) was approved by the EPFO in its Central Board of Trustees meeting held on August 21, 2019

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