Higher pension issue likely on EPFO central board of trustees meet agenda

The issue of higher pension is expected to be a key agenda item for the biannual meeting of the Employees’ Provident Fund Organisation’s (EPFO’s) central board of trustees (CBT). The retirement fund body has asked all board members to be present at the 234th CBT meeting, scheduled for next Tuesday.

The issue follows the Supreme Court’s November 2022 decision upholding a 2014 amendment to the Employee Pension Scheme (EPS) that allowed EPFO members to opt for a higher pension by contributing up to 8.33 per cent of their actual salaries towards pension — instead of 8.33 per cent of pensionable salary capped at Rs 15,000 a month. The court had given four months’ time for members to opt for this. After multiple extensions, nearly 1.8 million EPFO members have so far opted for a higher pension.

While the full agenda is not yet known, reinvestment of redemption proceeds from EPFO’s investments in exchange-traded funds (ETFs) is another issue likely to be taken up at the CBT meeting, according to sources familiar with the matter.

“The Supreme Court order on higher pensions has seen many delays and extensions and the matter is still underway. The thrust at the upcoming meet will be to draw out a strategy and a clear pathway for a smooth implementation of the same, as a number of pensioners are still facing troubles in accessing the pension portal,” said Confederation of Indian Industry (CII) Executive Director Sougata Roy Choudhury, who represents industry on the EPFO central board.

An employee representative who did not wish to be named said: “The exact mathematics of the scheme is still not clear, nor is the formula for calculation of a higher pension. Moreover, there is no clarity on how this scheme will be funded. [We] will demand that the government come up with [better] solutions and expedite the process.”

On the issue of reinvestment of redemption proceeds from ETF investments, the member said: “In its last meeting, the board approved reinvestment of redemption proceeds from EPFO’s ETF investments. While the issue is pending with the finance ministry, [we] might like to take stock of the development.”

Besides some administrative work like presenting the annual report, discussions could also feature the prospective plan to enhance EPFO’s physical and digital infrastructure, such as opening of new regional offices and strengthening of the digital apparatus. The existing infrastructure faces capacity constraints, said Centre of Indian Trade Unions (Citu) President A K Padmanabhan, another employee representative on the board. 

In its last meeting, held on March 26 and 27, the CBT had fixed the interest rate for 2022-23 at 8.15 per cent, the second-lowest in over four decades.