Govt Tightens Pension Rules
November 3, 2008
Employees desiring to withdraw part of their pension fund at the time of retirement will not get to do so anymore with the Government tightening the withdrawal norms.
The Government circulated the new norms for Employees Pension Scheme to all members of the Central Board of Trustees of Employees Provident Fund Organisation (EPFO) on October 16, nearly a month after taking the unilateral decision.
The EPFO subscribers can no longer go for commutation of pension as the relevant clause under 'Paragraph 12A' has been deleted under the new norms. The paragraph 13 dealing with the option of drawing reduced pension as well as getting return on capital is also deleted.
The Government also toned down the benefits for those who desire early retirement to avail the monthly pension checks. For this the Government has increased rate of reduction to four per cent from three per cent per year, if a subscriber desires to draw monthly pension from a date earlier than 58 years of age by amending the relevant clauses.
"We got this notification last month but it came into effect from September 26. It was circulated in the second fortnight of October," Secretary Hind Mazdoor Sabha and a member of Central Board of Trustees (CBT) told PTI.
He said, "However, the Government can make necessary changes as per the power conferred to it under Employees' Provident Funds and Miscellaneous Provision Act 1952, but it should be discussed with central trade unions' representatives as well as with CBT. Before implementing this scheme, it was discussed in CBT meeting as well as unionists."
He said, "When the matter of approval of the EPS 1995 came before Apex Court, the central trade unions supported the government considering its various benefits for subscribers. But now government has withdrawn some of those benefits without giving any heed to central trade unions."
When asked about the deficits due to early withdrawals from the scheme, Nagpal replied, "The Government has already amended Table 'B' and 'D' which elaborates rate of returns keeping those between 7 and 8 per cent which was earlier hovering around 12 per cent."
Adding further he explained, "Presently there are deficit of around Rs 25,000 crore, which would be made in a years time as the Government has implemented Table 'B' and 'D' in June this year. Now withdrawals would also reduce due reduction of interest rates."
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