18 Feb, 2024 01:00 PM

EPFO to overhaul pension division, to setup in-house actuary

EPFO to overhaul pension division, to setup in-house actuary

The Employees' Provident Fund Organisation (EPFO) plans to overhaul its pension division, including by setting up an in-house actuary and hiring additional staff, as the Supreme Court's 2022 order on higher pensions has significantly added to the workload of the retirement fund body.

The EPFO may also ask exempted establishments to pay for the administrative charges involved in computing and processing of higher pensions for their employees.

The proposals were put before the EPFO's central board of trustees that met on Saturday. "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 said in the agenda document, which ET has seen.

The EPFO has already appointed an actuary to assess the impact on the pension fund from the court order. But since millions of employees who have opted for higher pensions are still working, the retirement fund body feels the process will continue for years and hence it requires an in-house facility.

Seeking the board's approval to hire additional staff, the retirement fund body said a large proportion of applicants permitted to opt for higher pensions are in service.

"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 said. Arguing for passing on the administrative cost to exempted establishments, the EPFO said almost 52% of the workload for higher wage cases would pertain to 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 said, adding some measures to redress this anomaly would be required and suitable proposal for this would be brought in this regard. As per the EPFO, the higher pension applications from exempted establishments would be decided based upon the Trust Rules approved by the appropriate government, which could be different for different exempted establishments and examination and processing of such cases would involve more effort and resources.

As on December 15, 2023, the EPFO had received 1.74 million applications seeking higher pension by pensioners and existing members for validation of option or joint option. Of these, 1.17 million applications are pending with the retirement fund body while demand letters have been issued to 42,164 applicants. As many as 22,703 applications have been rejected with over 72% of those from pensioners who retired prior to September 1, 2014, the cut-off date set by the court for seeking higher pension.

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