There have been several hurried messages about whether to choose the enhanced pension from EPS as per the recent Supreme Court ruling in Nov 2022. The Supreme Court set deadline – March 3, 2023 – with little clarity from EPFO has added to the anxiety.
Well, the idea of extra pension sounds good. The only question that needs to be asked is “at what cost”? What’s the trade-off?
Should you go for the enhanced pension option?
Consider the following 2 points before you do.
1, This is not a free lunch. You are transferring funds from your EPF corpus to get the enhanced pension. Which means, the EPF corpus will reduce. You are making the contribution for this extra money.
2, Once you give money to EPS, it is gone, forever. The EPS mandate is to only offer a pension. To you, first, and then after death, 50% of the pension to your spouse. If both of you and your spouse are no more, there is nothing paid out to the heirs.
Even if the pension is paid out for just a few years.
Unlike EPF or NPS and other pension schemes, where there is an option to get your capital contribution transferred to your heirs/nominees.
Simple question – Can you do better with control of your own money?
With all the current investment options available today, you can design your own pension.
That’s my limited understanding. If I am missing any particular detail, please do enlighten or share a resource.