EPFO manages social security funds for workers in India.
EPFO Higher Pension: The Employees Provident Fund Organization (EPFO) has granted an extension of 60 days for eligible members to apply for higher pensions, following the Supreme Court's directive. As per the new deadline, all eligible members have until May 3, 2023, to apply jointly with their employers via the unified members' site of the retirement fund organisation EPFO.
Employees who were EPF members on September 1, 2014, and who remained EPF members on or after September 1, 2014, but missed the earlier deadline to apply for higher pension, are eligible for the extension. Employees who retired before September 1, 2014, and whose EPFO application for a higher pension was denied, must submit their application by March 3, 2023, as no extension has been given to them.
Choosing higher pension under the EPS scheme requires a portion of an EPFO member's EPF corpus to be moved to the EPS scheme from the date of joining. While this can provide a larger pension after retirement, it can jeopardize early retirement plans, as EPS pension eligibility is only granted after 10 years of employment and 58 years of age.
Moreover, opting for higher pension under EPS can reduce the lump sum amount an employee receives at retirement. Therefore, employees need to weigh the pros and cons before making a decision. Other retirement options beyond EPFO, such as government-backed NPS, can offer more flexibility and diversity in retirement planning.
Ultimately, the decision to apply for higher pension under EPS rests on two primary factors: whether EPF is the preferred retirement investment vehicle and if a higher monthly pension appeals more than lump sum benefits on retirement. If both factors are in the affirmative, the subscriber may proceed to explore the opportunity further.
There are multiple ways to secure post-retirement life, such as investing in equity for dividend income and capital appreciation, real estate for rental income, and debt instruments for interest income. Spreading retirement savings among multiple baskets instead of concentrating them in a single investment vehicle can also provide more security.