There is good news regarding pension. Retirement fund organization EPFO is contemplating to bring a new pension scheme for organized sector employees. The government may also soon remove the cap imposed under the Employee Pension Scheme (EPS). Let us know how this will affect your life.
What is EPS limit?
It is worth noting that at present the maximum pensionable salary is limited to Rs 15,000 per month. That is, whatever your salary may be, but the calculation of pension will be only on Rs 15,000. The matter regarding removal of this limit is going on in the court.
What are the rules of EPS now?
Every person employed becomes a member of EPS. Under this, the employee gives 12% of his salary in EPF, and then the same amount is also given by his company, but a part of this also goes to 8.33% EPS. But due to the limit of 15 thousand rupees, the total pension (8.33% of 15,000) comes to 1250 rupees.
Even when the employee retires, the maximum salary for calculating the pension is considered to be Rs 15 thousand, according to this, the maximum pension an employee can get under EPS is Rs 7,500.
How is pension calculated?
Now know how pension is calculated? One thing must be noted that if you have started contributing to EPS before September 1, 2014, then the maximum limit of monthly salary for pension contribution for you will be Rs.6500. If you have joined EPS after September 1, 2014, then the maximum salary limit will be 15,000. Now see how pension is calculated.
EPS Calculation Formula
Monthly Pension = (Pensionable Salary x Years of EPS Contribution)/70
Assuming here that the employee starts contributing to the EPS after September 1, 2014, then the pension contribution will be Rs 15,000. Suppose he has worked for 30 years.
Monthly Pension = 15,000X30/70
= Rs 6428
Maximum and Minimum Pension
Under this, the employee’s service of 6 months or more will be considered as 1 year and if it is less then it will not be counted.
If the employee has worked for 14 years 7 months, then it will be considered as 15 years.
– If you have worked for 14 years 5 months, then only 14 years of service will be counted.
Under EPS, the minimum pension amount is Rs 1000 per month, while the maximum pension is Rs 7500.
With this, if the limit of 15 thousand ends and your basic salary is 20 thousand rupees, then the pension you will get according to the EPS formula will be this. (20,000 X 30)/70 = Rs.8,571 .
Existing Conditions for Pension (EPS)
It is necessary to be an EPF member for pension.
It is mandatory to be in the job for at least 10 regular years.
Pension is available when the employee turns 58.
There is an option to take pension after 50 years and even before the age of 58.
– Keep in mind that on the first pension, you will get the reduced pension and for this you will have to fill Form 10D.
On the death of the employee, the family gets pension.
If the service history is less than 10 years, then they will get the option to withdraw the pension amount at the age of 58 years.