Employee Pension Scheme: Pension is fixed on the retirement of the employee. But, having a limit in this, the pension after retirement is not very high. Hence there is a demand to remove this limit. CBT meeting is also going to be held this month, in which pension
Employee Pension Scheme: Retirement fund organization EPFO is contemplating to bring a new pension scheme for organized sector employees. On the other hand, hearing is also being held in the Supreme Court to remove the cap on investment under the Employee Pension Scheme (EPS). We explain to you what this matter has to do with you and how it will affect your life.
What is the matter of removal of EPS limit
Before proceeding on this matter, let us understand what is this whole matter. At present, the maximum pensionable salary is limited to Rs 15,000 per month. Meaning, 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.
On August 12 last year, the Supreme Court had adjourned the hearing of a batch of petitions filed by the Union of India and the Employees’ Provident Fund Organization (EPFO), which said that the pension of employees cannot be limited to Rs 15,000. . The hearing of these cases is going on in the court.
What are the rules regarding EPS now?
- When we start a job and become a member of EPF, then at the same time we also become a member of EPS. The employee gives 12% of his salary in EPF, the same amount is also given by his company. , but a part of it also goes to 8.33% EPS.
- As we mentioned above that at present the maximum pensionable salary is only 15 thousand rupees, that means every month the pension share is maximum (8.33% of 15,000) Rs 1250.
- 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.
This is 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
Here assuming the employee started contributing to EPS after 1st September, 2014, then the pension contribution would be Rs 15,000. Suppose he has worked for 30 years.
Monthly Pension = 15,000X30/70
= Rs 6428
Maximum and Minimum Pension
One more thing to remember that 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. Meaning if the employee has worked for 14 years 7 months, then it will be considered as 15 years.
But if you have worked for 14 years and 5 months, then only 14 years of service will count. The minimum pension amount under EPS is Rs 1000 per month, while the maximum pension is Rs 7500.
8,571 will get pension
If the limit of 15 thousand is removed and your basic salary is 20 thousand rupees, then the pension you will get according to the 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.
Big announcements can be made in CBT meeting
According to the news of PTI, ‘There has been a demand for more pension on higher contribution among the members of EPFO. Thus a new pension product or scheme is being
actively considered for those whose monthly basic salary is more than Rs 15,000. According to sources,
the proposal on this new pension can come in the meeting of the Central Board of Trustees (CBT), the apex body decision-making body of EPFP, in Guwahati on March 11 and 12.
