Do you want to increase your pension amount? If yes, your wish is accepted. EPFO has recently released a new rule for the pensioners covered under employee pension scheme As per new rule a pensioner has the option to increase the pension amount by 4% or 8.16% for the lifetime. In order to increase the pension amount pensioner needs to defer the age of starting a pension. Till now, pension starts at the age of 58 years no matter you retire at the age of 60 years or 62 years. However, now you have the option to defer pension starting age and increase the pension amount. Let’s demystify this new EPFO rule of pension in detail.
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How to get extra pension benefit for a lifetime?
Defer Pension without contribution –
Option -1 – Defer your pension for 2 years without contribution and you can get 8.16% extra pension for the lifetime. In case you cannot afford to delay pension for 2 years you have following option.
Suppose you are going to get the pension of Rs.5000/month after 58 years. If you select option -1 and postpone payment of pension till 60 years you will get 8.16% extra pension. This means your revised pension amount will be Rs.5408/month. (5000 x 1.0816).
Option -2 – Defer your pension for 1 year without contribution and you can get 4% extra pension for the lifetime.
Suppose you select option -2 and postpone payment of pension till 59 years you will get 4% extra pension. This means your revised pension amount will be Rs.5200/month. (5000 x 1.04).
Defer Pension with contribution –
If you want to increase your pension further you can opt to continue a contribution in the pension fund and defer the pension payment age. Your contributory service after 58 years of age will be included in a calculation of pensionable service and pensionable salary.
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The decision of increasing in original pension amount under this condition is left on pension division. The following options are given to determine pension amount with the contribution.
- Pension as on date of exit between 58 and 60 years.
- Pension as on date of exit between 58 and 60 years +4% of pension (as on date of exit) for every completed year up to 60 years.
- Pension as on date of exit between 58 and 60 years +4% of pension (as on age of 58 years) for every completed year up to 60 years.
Under second option you will get highest pension payment.
For more information, you can refer to Pension Notification released on EPF site.
Eligibility and Applicability –
- The subscribers who are not already pensioners of EPFO and have completed at least 10 years of service on attaining the age of 58 years shall be eligible.
- If you are already drawing pension you can not apply for a higher pension.
- The new benefits will be applicable to the EPF members on or after April 25, 2016.
How to apply for this benefit?
- EPF subscriber can execute the option to defer the pension with a contribution by submitting a request letter to field officer.
- The request letter is to be submitted by the subscriber within prescribed time limit decided by pension division head office.
- EPF subscriber can submit the claim form in case he wants to defer pension without contribution.
If you are not in need of pension amount at the age of 58 years it is better to defer your pension payment for two years. It will increase your pension by 8.16% for the lifetime.