EPFO Rules for Pension: Under the Higher Pension Scheme, the pensionable salary will also increase, that is, the basis on which the pension is calculated. According to the current rules, the maximum limit of pensionable salary under the Employees’ Pension Scheme (EPS) is Rs 15,000. The pensionable salary of any employee for the last 60 months before exiting EPS is his average monthly salary. Now the government has also brought the Higher Pension Scheme, under which this limit is to be increased. Many labor unions have demanded to increase it to Rs 25,000, which the Finance Ministry is considering. If this happens, your monthly pension will increase.
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Private Job: Who gets pension
If you are in a private job, your money is deducted in Provident Fund (PF) and you have worked for 10 years, then you are also entitled to pension. A part of the funds deposited in your Provident Fund account goes to the Employees’ Pension Scheme (EPS) for pension fund. Employees’ Pension Scheme is a pension scheme, which is managed by EPFO. EPS was launched in the year 1995. It is for employees working in the organized sector. You will get the benefit of this scheme only if your job tenure is at least 10 years. You will start getting this pension after completing the age of 58 years.
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Higher Pension Scheme : Basic pension of Rs 25000
Let’s assume that you started working at the age of 23 and are retiring at the age of 58. That means you have worked for a total of 35 years. If your maximum basic salary in the last 60 months before exiting EPS is considered to be Rs 25,000, then the pension will be calculated on this basis. The pensionable salary of any employee for the last 60 months before exiting EPS is his average monthly salary. Currently, there is a cap of Rs 15,000 on this. Under the Higher Pension Scheme, it can be made Rs 25,000.
Monthly pension: 25,000X 35/70 = Rs 12,500
One thing to note here is that the basic salary may be higher at the time of your retirement, but just like the current capping is Rs 15,000, similarly, Rs 25,000 will be considered as the maximum limit in future.
(Note: EPFO has not yet announced the process of higher pension calculation. We have done the calculation here on the old formula. Clarity in the calculation will come only after getting information about it from EPFO.)
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EPFO Rules: What is the maximum pension as per the current rules
Let’s assume that you started working at the age of 23 and are retiring at the age of 58. That means your job tenure was 35 years. Under the old pension scheme, the maximum pensionable salary is considered to be Rs 15,000.
Monthly pension = Pensionable salary X Pensionable service /70.
Monthly pension: 15,000X 33/70 = Rs 7500
EPFO: How is contribution made in EPS
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 12 percent. Out of the contribution made by the company, 8.33 percent goes to the employee’s pension fund (EPS) and the remaining 3.67 percent goes to the PF account.
According to the current rules, the maximum limit of pensionable salary is Rs 15,000. In such a situation, 15000 X 8.33 /100 = Rs 1250 will go to his pension account every month.
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Know some important rules
If an employee contributes to EPFO, he is entitled to get pension after working for 10 years. However, he gets this pension after completing 58 years of age. Pension can be taken even after 50 years, but pension will be given with deduction. If one leaves the job at the age of less than 50 years, then one will have to wait till the age of 58 years for pension, after which pension will be available. If he leaves the job at the age of 50 years, then he will not get the benefit of pension. If 10 years of service are not completed, then the entire pension fund can be withdrawn.
