The central government is planning to improve social security for the elderly after retirement.
The proposal would allow employees linked to the Employees’ Provident Fund Organization (EPFO) to convert their PF funds into a pension.
If this rule is implemented, employees will greatly benefit. They will receive a higher pension after retirement once the rule comes into effect.
The government is expected to make this significant social security announcement in the budget to be presented this year.
The country’s general budget will be presented on February 1. It is anticipated that the government may introduce new rules related to social security in this budget.
According to media reports, the Ministry of Labor and Employment, under the guidance of the Government of India, has already begun working on these social security rules.
If employees are given the option to convert their PF funds into a pension, they could receive a higher pension after retirement by transferring their accumulated amount into the pension fund.
You can convert PF funds into pension
The government is considering allowing employees to convert their PF funds into a pension, providing them with better financial security in old age after retirement.
Additionally, it has been reported that the central government is thinking of transforming the EPFO system to operate like a bank.
This change would allow employees to access banking services through the EPFO system, aimed at strengthening social security for employees post-retirement.
The new rules may provide these benefits
Employees can earn interest after retirement
At the time of retirement, if an employee decides they have other income sources and chooses not to start their pension at age 58, they may have the option to delay it until 60, 65, or another preferred age.
Meanwhile, the amount in their pension fund will continue to earn annual interest until the pension begins.
Facility to deposit lump sum amount is available
Reports suggest that the ministry plans to permit EPFO members to make lump sum deposits into their accounts in addition to their regular monthly contributions.
This option has been under discussion by the government for a long time, but a final decision is yet to be made.
If the government introduces this facility, it will encourage higher contributions to the PF account, allowing employees to receive a better pension after retirement.
You can get income tax exemption
The ministry states that many people avoid fixed deposits in banks because the interest rate there is under 7 percent. In contrast, the PF account offers more than 8 percent interest.
If individuals are allowed to make lump sum deposits into their PF accounts, they can begin investing in it for better future security.
