EPFO to restore commutation of pension

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  • Published
    3rd Sep, 2019


The Central Board of Trustees (CBT) of the Employee Provident Fund has approved a proposal for the restoration of commuted value of the pension to the Pensioners after 15 years of drawing commutation under the EPS 1995 scheme.


  • Provident Fund enables employees to contribute a part of their savings each month towards their pension fund. Over time, this amount gets accrued and can be accessed as a lump sum amount or in installments, at the end of their employment or at retirement.
  • Commutation is defined as giving up part or all of the pension payable from retirement in exchange for an immediate lump sum.
  • In simple terms, commutation means a lump sum payment in lieu of periodic payments of pension. In such a case, the amount of pension will be lower than the amount of pension without any commutation.
  • For example, if the monthly pension is arrived at Rs 35,000 without commutation and if the employee goes for a certain commuted value, the pension gets reduced to say Rs 29,000.
  • The provision for commutation of pension was withdrawn by the EPFO in 2009.
  • Before 2009, under the commutation, monthly pension used to be cut by one­third for the next 15 years and the reduced amount would be given in lump sum. After the 15 years the pensioners were entitled to get the full pension.
  • The amendment seeks to restore the original amount of pension after 15 years equal to the same amount as it would have been without commutation.
  • Now, the Central Board of Trustees approved for the restoration commuted value of pension to pensioners after 15 years of drawing commutation.
  • The move will provide relief to 3 lakh pensioners who had opted for commutation and got a lump sum amount at the time of retirement before 2009.

Employees’ Provident Fund Organisation (EPFO)

  • EPFO (Employees’ Provident Fund Organization) is a statutory body incepted by the government of India.
  • Being the country’s largest social security organization, it mainly encourages people to save for retirement, among others.
  • EPFO comes under the purview of Ministry of Labor and Employment and came into being in 1951.
  • It covers every establishment in which 20 or more persons are employed and certain organisations are covered, subject to certain conditions and exemptions even if they employ less than 20 persons each.


The Act and all its Schemes are administered by a tri-partite Board called Central Board of Trustees (EPF). It has representatives of Government (both Central and State), Employers and Employees.

The Central Board of Trustees (EPF) operates 3 schemes:

a) The Employees’ Provident Funds Scheme 1952 (EPF)

b) The Employees’ Pension Scheme 1995 (EPS)

c) The Employees’ Deposit Linked Insurance Scheme 1976 (EDLI)

The EPF Organisation (EPFO), is an Organization that is established to assist the Central Board of Trustees (EPF)


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