The Employees’ Provident Fund Organisation’s trustees in a meeting will consider a proposal to raise the age limit from 58 to 60 years for vesting of pension under the Employees’ Pension Scheme (EPS-95).
At present, a formal sector worker covered under the EPS-95 can make contributions towards the pension scheme till the age of 58 years and can claim pension after that.
The Pension Implementation Committee (PIC) has recommended an increase in the age for vesting pension to 60 years, while suggesting that the actuary should be asked to develop a model to give incentive to those persons who opt for drawing pension at the age of 60 years.
An actuary analyses financial consequences of risk after studying uncertain future events, particularly of concerns to pension and insurance plans.
Raising the age limit would reduce the deficit in pension fund and would increase the pension benefits of members as there would be two additional years of service, as per the agenda listed for the meeting of the Employees’ Provident Fund Organisation’s apex decision making body – Central Board of Trustees (CBT).
According to a report of the valuer on the scheme, increasing the age limit would reduce the shortfall in the pension fund to the extent of Rs 27,067 crore. The level of deficit is not a matter of concern, though it is recommended that the retirement fund body should look into investment returns more carefully and not increase benefits without consulting the actuary, and do sensitivity analysis more frequently, the valuer has suggested.
As per the valuer, appointed by EPFO, net liability or deficit is Rs 10,855 crore as of March 31, 2012, Rs 6,712.96 crores as of March 31, 2013 and Rs 7,832.74 crore as of March 31, 2014.
It is also proposed by the committee to increase the short service pension entitlement age from 50 years to 55 years. This measure would reduce the shortfall in pension fund to the extent of Rs 12,028 crore.
At present, members can ask for fixing pension at attaining the age of 50 years provided they have served for at least 10 years.
It is also proposed that the pensionable salary should be determined on the basis of 36 months average wages immediately preceding the date of exit from the scheme in place of existing 60 months.
It may be noted that there is no bar of any kind for contributing towards other social security schemes run by the Employees’ Provident Fund Organisation (EPFO) – Employees’ Provident Fund Scheme 1952 and Employees’ Deposit Linked Insurance Scheme 1976.