The Hindu Business Line : EPFO trustees seek to scrap minimum age for pension

A SECTION of the trustees of the Employees' Provident Fund Organisation (EPFO) is keen on doing away with the minimum entitlement age for receiving pension in the country.

These trustees are planning to suggest scrapping of the provision in the existing Employees Pension Scheme 1995, which restricts a person from receiving pension below the minimum eligibility age of 50 years.

It is now being suggested that pension should be payable only on the basis of the person fulfilling the financial condition, irrespective of age.

According to the current provisions, pension is payable to an employee on fulfilling a minimum of 10 years of contribution to the fund and attaining the age of 58 years.

However, on ceasing employment earlier than 58 years, pension may be availed of before attaining the age of 58, but not below 50.

The pension scheme is funded by diverting 8.33 per cent of the provident fund contribution while the Central Government continues to contribute at the rate of 1.16 per cent on wages at the end of the year.

According to one of the trustees, since a large number of people are job-hopping these days, the restrictive age of 50 years makes little sense and many people are found to be withdrawing their entire provident fund money each time they change their jobs.

Currently, if an employee contributes to the provident fund for 10 years from the age of 25, he becomes eligible for pension only after another 15 years.

However, the employee is at liberty to withdraw the entire PF amount on the basis of the corpus accretion formula any time during this period.

Consequently, in such situations, most of the employees withdraw their PF money despite the fact that the EPFO offers the highest rate of interest.

Instead, the trustees said, if the EPFO can launch a scheme that can enable proportionate payment from the end of 10 years only, it would work as a disincentive for withdrawals and more funds could possibly be retained.

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