Can Epfo Change the Pension Formula? – As per our readers’ demand and comments, we are publishing this article. If you want to know about Can Epfo Change the Pension Formula?, continue reading and learn more.
Can Epfo Change the Pension Formula?
Yes, the EPFO can change the pension formula in the future. The current pension formula under the Employees’ Provident Fund Scheme (EPS) 1995 is:
Monthly pension amount = (Pensionable salary X pensionable service)/70
The pensionable salary is the average salary of the last 60 months of service. The pensionable service is the total number of years of service under the EPS scheme.
The EPFO can change the pension formula by amending the EPS scheme or by issuing a new circular. The Supreme Court has ruled that the EPFO has the power to change the pension formula, but it must do so in a fair and transparent manner.
The EPFO may decide to change the pension formula for a number of reasons, such as to:
- Improve the financial sustainability of the EPS scheme
- Make the pension scheme more equitable
- Take into account changes in the cost of living
If the EPFO decides to change the pension formula, it will need to consult with stakeholders, such as trade unions and employers. The EPFO will also need to ensure that the new formula is fair and transparent.
It is important to note that any change in the pension formula will only affect future pensioners. Existing pensioners will continue to receive their pension under the old formula.
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