Employee Pension Scheme: According to the existing rules, if the basic salary of an employee is Rs 15,000 or more, then only Rs 1250 maximum can be deposited in the Pension Fund (EPS).
Employee Pension Scheme: There is big news related to Employees’ Provident Fund Organization. A big decision can be taken in the meeting of the Central Board of Trustees-CBT to be held on March 12 next month.
EPFO members can get the gift of the new pension scheme. After the issue raised regarding low pension under the EPS-Employee Pension Scheme, now the organization is considering to bring a new fixed pension scheme.
In the new pension scheme, the subscriber will get the option to choose the fixed pension amount himself. Self-employed and private employees will also be able to register in this.
The amount of pension will also be decided on the basis of salary and remaining length of service. Those who opt for this pension scheme will be excluded from the Employee Pension Scheme (EPS).
Those with more than 15,000 basic salary will get the benefit
The meeting of the Central Board of Trustee is to be held in Guwahati on 12 March. There will be a discussion on the new pension scheme. However, this new pension scheme will not be for everyone.
In this, those with a basic salary of more than 15,000 will be included. It can be optional for them too. If sources are to be believed, EPFO is bringing this option due to the demand of more pension on longer contribution.
In the meeting of the CBT, a decision can be taken on this for employees with basic salary more than Rs 15,000 and those who are not compulsorily covered in the Employees’ Pension Scheme 1995 (EPS-95).
Option will be available to give benefit of more pension
If sources are to be believed, then the amount of the new fixed pension scheme of EPFO will be decided by the contribution given. You will have to contribute according to the pension you want.
EPFO was searching for the option of Employee Pension Scheme-1995 (EPS-95) for a long time. The existing amount in EPS is completely tax free. But, the minimum pension in it is very less.
The limit is only up to Rs 1250 on the basis of the month. In such a situation, there is a preparation to give option to the employed person for the facility of more pension.
What is the rule in EPS now?
When an employee becomes a member of Employee Provident Fund (EPF), he also becomes a member of EPS. Contribution of 12% of the basic salary of the employee goes to PF.
Apart from the employee, the same part also goes to the employer’s account. But, a part of the contribution of the employer is deposited in the EPS ie Employee Pension Scheme. The contribution of basic salary 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 10 thousand rupees, then the contribution will be only 833 rupees.
The calculation of pension on the retirement of the employee is also considered as the maximum salary of 15 thousand rupees only. In such a situation, after retirement, the employee gets a maximum pension of only Rs 7,500 under the EPS rule.
How is pension calculated?
Formula for EPS Calculation = Monthly Pension = (Pensionable Salary x Number of Years Contribution in EPS Account)/70.
If someone’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 a pension of only Rs 6,828 per month.
How much pension will you get if the limit is removed?
If the limit of 15 thousand is removed and your salary is 30 thousand, then the pension you will get according to the formula will be this. (30,000 X 30)/70 = 12,857
