EPFO To Overhaul Pension Division; Hire More Actuarial Staff | Details

EPFO news: The Employees' Provident Fund Organisation (EPFO) is set to overhaul its pension division, including the establishment of an in-house actuary and the recruitment of extra staff, following the Supreme Court's 2022 verdict on increased pensions, which has notably increased the workload for the pension fund entity.
epfo pension news

EPFO is set to overhaul its pension division.

Photo : Shutterstock.com
EPFO news: The Employees' Provident Fund Organisation (EPFO) is set to overhaul its pension division, including the establishment of an in-house actuary and the recruitment of extra staff, following the Supreme Court's 2022 verdict on increased pensions, which has notably increased the workload for the pension fund entity. The EPFO is considering requiring exempted establishments to cover the administrative expenses incurred in the calculation and processing of higher pensions for their employees. These plans were discussed at the EPFO's central board of trustees meeting on Saturday, Economic Times reported.
"There is an urgent need to have an in-house actuarial setup also. The details for the set up are currently being explored," the EPFO stated in the agenda document, which ET has reviewed. The EPFO has already engaged an actuary to determine the impact of the court's decision on the pension fund. However, with millions of employees who have chosen higher pensions still employed, the pension fund entity believes this task will extend over years, necessitating the establishment of an internal facility.
In its request for the board's consent to hire more staff, the pension fund body mentioned that a significant number of those allowed to opt for higher pensions are still working.
"As such, the work related to pension on higher wages shall be continuing in the future. Therefore, there is a need for separate staff for pension work in the head office as well as those field offices where a large number of applications have been received," it elaborated. In justifying the transfer of administrative costs to exempted establishments, the EPFO noted that nearly 52% of the workload for higher wage cases falls on exempted establishments.
"The administrative cost of pension-related work is met from the administrative charges paid by un-exempted establishments while the exempted establishments pay only inspection charges that are much less compared to the work involved for them," it mentioned, adding that addressing this discrepancy would necessitate some measures, and a suitable proposal would be introduced in this context. According to the EPFO, the handling of higher pension applications from exempted establishments will be based on the Trust Rules approved by the appropriate government, which may vary for different exempted establishments, and the examination and processing of such cases will require additional effort and resources.
As of December 15, 2023, the EPFO had received 1.74 million applications for higher pensions from pensioners and current members seeking validation of option or joint option. Of these, 1.17 million applications are pending with the pension fund entity, while demand letters have been sent to 42,164 applicants. A total of 22,703 applications have been rejected, with over 72 per cent of those rejections pertaining to pensioners who retired before September 1, 2014, the deadline set by the court for applying for a higher pension.
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