EPF Pension Scheme Change in 2027: Should I Opt-in?

Ans: EPF

Ans: Sorry. I do not have any expertise on this particular subject and I would not be able to answer your question in any comprehensive manner.

However, I did some googling and found these two articles useful. Hope they answer your question to some extent:-

https://economictimes.indiatimes.com/news/et-explains/explained-how-much-your-eps-pension-will-rise-how-to-get-that-all-details-here/articleshow/68716373.cms?from=mdr

https://economictimes.indiatimes.com/wealth/invest/factors-you-should-consider-before-opting-for-higher-pension-under-eps-scheme/articleshow/68750384.cms

Ans: You can continue to contribute to the EPF scheme if you join a new company after availing EPF pension at the age of 58, provided that you are a full-time employee on the company’s payroll.

However, you will not be eligible to become a member of the EPS (pension) scheme again, as the EPS membership ceases once you start receiving pension after attaining the age of 58 years.

Therefore, the employer’s contribution of 8.33% that would otherwise go to the EPS will be added to your PF account instead. Hence, the total contribution of 12% employee and 12% employer will go in EPF.

Ans: The decision to choose a higher pension through the Employees' Provident Fund (EPF) or to take the complete accumulations as a lump sum after retirement is influenced by your financial goals, risk tolerance, and personal circumstances.

Opting for Higher Pension (Annuity):
Pros:
• Provides a regular and secure source of income in retirement.
• Reduces the risk of outliving your savings.
• Offers financial stability during retirement years.
Cons:
• The pension amount might be fixed and may not keep up with inflation.
• Leaves less room for flexibility or accessing a lump sum for unforeseen expenses.

Taking Total Accumulations as a Lump Sum:
Pros:
• Provides a lump sum that can be invested or used as needed.
• Offers flexibility to manage your own investments and potentially achieve higher returns.
• Allows you to address large, immediate expenses or emergencies.
Cons:
• Requires disciplined financial management to ensure the money lasts throughout retirement.
• Carries the risk of outliving your savings if not managed wisely.

The decision should be in line with your retirement objectives. If financial stability and a steady income are your main concerns, choosing a higher pension option through EPF can be a wise decision. If you're comfortable handling your own funds, want flexibility, and have a well-thought-out retirement plan, taking the lump sum and investing it properly could bring superior returns and financial control.

Ans: No, once you opt for the EPF pension, you cannot change or increase the pension amount. The pension calculation is based on the service years and average salary during the last 60 months of service. The interest is not applicable in the same way as on EPF contributions. The amount you receive is fixed and determined by the EPFO guidelines.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in