Pension rules changed, now do pension calculation like this


Employee Pension Scheme Update : There is a constant demand to remove the capping on the Employee Pension Scheme. Now the Supreme Court is also hearing in this matter. For this, a bench has been prepared by the Supreme Court, which can give a decision in the interest of the employees after hearing the matter thoroughly and taking the opinion of both the parties. In the current framework, there is a maximum limit or limit of Rs 15000 per month for pension under the EPS scheme.

Employee Pension Scheme Update

EPS Employee Pension Scheme Update

Employee Pension Scheme is a great savings scheme for those working in the private sector. It is called retirement fund because some part is deducted from the salary of the employee during the job and some part is deposited in the provident fund and some part is deposited in the employee pension scheme. Employees get the entire PF amount in one lump sum at the age of 58. However, the pension amount is fixed on a monthly basis. There is a formula to decide the EPS pension.

What are the rules now?

When an employee becomes a member of Employees’ Provident Fund, he also becomes a member of EPS. The contribution of 12% of the basic salary of the employee goes to PF. Apart from the employee, this part also goes to the account of the employer. But, a part of the employer’s contribution is deposited in the EPS i.e. Employee Pension Scheme. The contribution of basic pay in EPS is 8.33%. However, the maximum limit of pensionable salary is Rs 15,000. In such a situation, only a maximum of Rs 1250 can be deposited in the pension fund every month.

understand by example

According to the existing rules, if the basic salary of an employee is Rs 15,000 or more, then Rs 1250 will be deposited in the pension fund. If the basic salary is Rs 10,000 then the contribution will be only Rs 833. The calculation of pension on the retirement of the employee is also considered as the maximum salary of Rs.15 thousand only. In such a situation, after retirement, employees can get only Rs 7,500 as pension under the (Employee Pension Scheme) rule.

What will happen if the limit of 15,000 is removed?

According to Bhanu Pratap Sharma, retired Enforcement Office of EPFO, if the limit of 15 thousand rupees is abolished from pension, then more than Rs 7,500 (Employee Pension Scheme) pension can be received. But, for this, the employer’s contribution to the EPS will also have to be increased.

How is pension calculated?

Formula for EPS Calculation = Monthly Pension = (Pensionable Salary x No. of Contribution to EPS Account)/70

If one’s monthly salary (average of last 5 years salary) is Rs 15,000 and the duration of the job is 30 years, then he will get pension in Employee Pension Scheme of Rs 6,828 per month only. If the limit of 15 thousand is removed and your salary becomes 30 thousand then you will get pension according to the formula. (30,000 x 30)/70 = 12,857

Existing Conditions for Pension (Employee Pension Scheme Update)

  1. Must be an EPF member.
  2. Must be in job for at least 10 regular years.
  3. Pension is available on attaining the age of 58 years. Option to take pension after 50 years and even before the age of 58 years.
  4. On taking the first pension, you will get the reduced pension. For this, Form 10D has to be filled.
  5. On the death of the employee, the family gets pension.
  6. 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.

EPS is part of your salary

Like EPF, EPS (Employee Pension Scheme) is also a part of the salary of the employee. Minimum Rs 1,000 to Rs 7,500 is available as pension every month in EPS. However, most of the people do not know how the employee pension plan is calculated.

EPS Formula : Employee Pension Scheme Update

12% of the basic salary of the employee is deposited in the PF account. The employer’s contribution is also the same. But, a part of the employer’s contribution gets deposited in the EPS i.e. Pension Fund. The contribution of basic pay in EPS is 8.33%. However, the maximum limit of pension eligible salary is Rs 15,000. In such a situation, only a maximum of Rs 1250 can be deposited in the pension fund every month. Employee Pension Scheme secures the future!

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