EPFO’s pro-rata yardstick miff pensioners, low payouts received due to lack of clarity on calculation

Kozhikode: The payment order (PPO) received by pensioners after a long wait has caused much heartburn as they feel they have not received the expected sum due to the intervention of the Employees Provident Fund Organisation’s (EPFO) and lack of clarity on calculating pensions.

As the EPFO suggested calculating higher pension on a pro-rata basis, the sum received has been much below expectations, said the pensioners.

The PPO was distributed at mass outreach programmes held in various districts to select beneficiaries on Tuesday. Such PPO distribution has happened in other states also, it is learnt.

But this is a clear departure from the usual practice, as PPOs are usually sent directly to the bank accounts of pension beneficiaries. In a 2019 circular, the EPFO clearly stated that when the pension is released, a detailed worksheet of the calculation should also be provided. The select beneficiaries who received the PPO on Tuesday were not given the worksheet.

As per the formula for pension calculation, the pensionable salary mentioned in the PPO is multiplied by the pensionable service and divided by 70 to arrive at the pension figure. But the beneficiaries have actually got an amount less than this calculation.

The higher pension should be calculated on a pro-rata basis as per an EPFO directive to its local offices, which had also cited examples to make this clear.

As per this approach, the total service would be divided into two- service before 2014 September 1 and after that. Then the salaries of these two periods would also be considered while calculating the pension. But this has not been mentioned anywhere in the PPO.

For those retiring after 2014 September 1, the pension is calculated based on the 60-month average before the pension. But if the highest salary before 2014, September 1 is below the 60-month average, and if that would be taken as a figure for calculating the pension, the highest salary for the period before 2014 should have been clearly stated in the PPO. This has been skipped now.