EPS Pension Calculation:The central government can increase the wage ceiling limit under EPFO from Rs 15,000 per month to Rs 21,000 per month. Such news is continuously coming from sources. If this news turns out to be true, it will directly impact salaried employees. Firstly, their contribution to EPF will increase, which will increase their pension after retirement. At the same time, more employees will be able to participate in EPS than before. Wage ceiling limit is the maximum salary limit, on the basis of which employees’ contribution to EPF (Employees Provident Fund) and EPS (Employees Pension Scheme) is decided.
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EPFO: Contribution to EPS will increase
Talking about the present time, every month 12 percent of the employee’s basic salary + DA is deposited in the PF account. The employer’s contribution is also only 12 percent. Out of the contribution made by the company, 8.33 percent amount goes to the Employees’ Pension Fund (EPS) and the remaining 3.67 percent amount goes to the PF account. According to the current rules, the maximum limit of pensionable salary is Rs 15 thousand. In such a situation, Rs 15000 X 8.33 /100 = Rs 1250 will go to his pension account every month. The remaining Rs 1750 goes into the EPF account.
But if the maximum limit of pensionable salary increases to Rs 21,000, then Rs 21000
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Pension Calculation: Pension on basic Rs 21000
Suppose you started working at the age of 25 and you are retiring at the age of 58. That means you have worked for a total of 33 years. If your maximum basic salary in the last 60 months before exiting EPS is considered to be Rs 21,000, then the pension will be calculated on this. The pensionable salary of any employee is his average monthly salary for the last 60 months before exiting the EPS. Currently there is a capping of Rs 15000 on this. However, such reports are coming from government sources that the Central Government can increase the wage ceiling limit under EPFO to Rs 21,000 per month.
The calculation formula for pension under EPS is: (Total years of service x Average monthly salary)/70.
Monthly pension: 21,000X 33/70 = Rs 9900
One thing to be noted here is that your basic can be higher at the time of retirement, but the way the capping is at Rs 15000, in the future Rs 21000 will be considered as the maximum limit.
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EPFO: What is the maximum pension as per the current rules?
Suppose you started working at the age of 25 and you are retiring at the age of 58. That means your service period was 33 years. Under the old pension scheme, the maximum pensionable salary has been considered to be Rs 15000.
Monthly pension = Pensionable salary
Monthly pension: 15,000X 33/70 = Rs 7071
