The employees who are contributing to employee provident fund scheme will automatically become members of employee pension scheme 1995. Under employee pension scheme 1995 when an employee completes the age of 58 years and when he or she contributes at least 10 years for EPF scheme will become eligible for monthly pension.
What is Pension Commutation Amount
While claiming monthly pension of the pensioners, they can get 1/3rd part of their monthly pension amount as a lump sum for 15 years. This amount is tax-free. After 15 years employees will get their pension as usual.
For example, if an employee monthly pension is 9000 Rs after retirement then 1/3rd of 9000 Rs i.e 3000 Rs will deduct from the employee monthly pension amount.
Now employee will get 6000 Rs as monthly pension for 15 yrs if he/she claims for pension commutation
Here the commutation amount will be calculated in the following manner:
- Monthly deduction amount = 3000 Rs
- For 1 year it is 3000 x 12 months = 36000 Rs
- For 15 years it is 36000 x 15 = 5,40,000 Rs
- So now the pensioner will get 5,40,000 Rs as commutation amount
How to Claim Pension Commutation Amount
Pensioners can claim their PF pension commutation amount by submitting PF pension application form 10D. On this form in the field, no 9 tick YES and submit this form to your regional EPF office.