CENTRALISED PENSION PAYMENT SYSTEM (Syllabus: GS Paper 3 – Economy)

Context: The Union Labour Ministry has cleared a proposal for Centralised Pension Payment System (CPPS) for about 78 lakh pensioners under the Employees’ Pension Scheme.

Centralised Pension Payment System (CPPS)

• About: The CPPS represents a significant shift by providing a national-level centralized system that allows pension payout through any bank or branch in India.
• Coverage: The Centralized Pension Payment System is estimated to benefit over 78 lakh EPFO EPS pensioners.
• Simplification of Disbursement: The CPPS replaces the current decentralized system, eliminating the need for each EPFO Zonal/Regional Office to manage arrangements with multiple banks.
• Cost Savings for EPFO: The switch to the CPPS is anticipated to result in substantial cost savings in pension payouts.
• Applicable from: Beginning on January 1st, 2025, this feature will be made available as part of EPFO's Centralized IT Enabled System (CITES 2.01), an ongoing IT modernization initiative.
• No Need PPO: The CPPS will guarantee pension delivery across India without requiring the transfer of Pension Payment Orders (PPO) from one office to another.
• Benefits: CPPS will enable a smooth transition to Aadhaar-based payment system.
• There will be no need for pensioners to visit the branch for any verification at the time of commencement of pension and the pension shall be immediately credited upon release.

Employees' Pension Scheme

• About: It is a social security initiative offered by the Employees' Provident Fund Organisation (EPFO). 
• Launched: 1995
• Objective: To help employees in organised sectors save for retirement. All employees eligible for the EPF scheme automatically qualify for EPS.
• This scheme aims to help employees in the organised sector, providing a pension post-retirement at 58.