The Employees’ Provident Fund Organization (EPFO) has shared good news for the EPF account holders with an update that will hold the difference for many now. The employees will now be able to convert the entire Provident Fund (PF) amount to pension under this new rule. Most importantly, this will secure a consistent stream of financial inflow for retired employees during their post-retirement years.
EPF Pension Increase: What Is The Update?
EPFO intends to amend the Employees’ Pension Scheme (EPS) to allow members to transfer entirely their PF savings to the pension scheme rather than lump-summing. Instead of receiving a lump sum amount after retirement, going here means employees can opt for a higher monthly pension. This will benefit thousands of employees who are dependent on EPF savings at retirement.
Earlier, only a fraction of the employer’s contribution (8.33% of the basic pay) went to the EPS, while the rest remained as part of the EPF corpus. Now, however, an employee can voluntarily transfer the entire PF balance to the pension system, which translates into a higher amount of monthly pension after retirement.
Beneficial Change
- Retiring Employees: This scheme will beneficially qualify for new accepting members who are nearing retirement, and these people will now receive a guaranteed pension.
- Private Sector Employees: Because many private-sector employees do not enjoy any other kind of pension benefits, this change will go a long way in providing these workers with financial security.
- Income-Stable Employees: Employees wishing for consistency-based monthly pensions over lump-sum withdrawals will now benefit.
How Will It Work?
- Voluntary Transfer: Employees will be provided with an option to transfer their entire EPF balance to the EPS.
- Higher Monthly Pension: The amount of pension accrued would be based on the transferred corpus amount.
- Long-Term Security: This assures a regular income even after one’s retirement.
Conclusion
This is a policy statement that moves ahead toward providing financial stability to retiring employees as the EPFO decides and allows the entire PF to be converted into a pension. While this guarantees a fixed pension, it is prudent for employees to assess the requirement before availing it. The implementing of this information is likely around the corner to millions of EPF account holders. Thus, stay tuned for further announcements from EPFO concerning the official guidelines and process for conversion.
Also Read; Pension New Rules 2025: The biggest change in the new rules of pension so far, know the rules