Employee Pension Scheme: 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.
Employee Pension Scheme: Employee has been contemplating for a long time to remove the capping on Pension Scheme (EPS). However, due to paucity of funds with the EPFO, a decision on this has not been taken in the last few years. The matter is in the Supreme Court. But, whether the monthly ceiling or capping of pension of Rs 15000 under the EPS scheme should be removed or not, the board of EPFO can consider CBT. The meeting of CBT is to be held in New Delhi on November 20. On the petitions of the Union of India and the Employees’ Provident Fund Organization (EPFO), the Supreme Court had said that there would be daily hearing.
What are the rules now?
When an employee becomes a member in the Employee Provident Fund, he also becomes a member of the EPS-Employee pension scheme. 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 Pension Fund. 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 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, employees can get only Rs 7,500 as pension under EPS rule.
What if the 15,000 limit is removed?
According to EPFO’s Retired Enforcement Office Bhanu Pratap Sharma, if the limit of 15 thousand rupees is abolished from the pension, then more than Rs 7,500 can be got pension. But, for this, the contribution of the employer to the EPS will also have to be increased.
How is EPS 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. (30,000 X 30) / 70 = Rs 12,857
What are the rules for pension?
If you want to withdraw EPF amount, then you can withdraw the amount deposited in your account anytime. Whether your job is of 6 months or 10 years. But, you may face some problem to withdraw the amount of pension. Because, there are many rules for this, which you should understand. Let us know what can be done with the pension amount in different situations?
Existing Conditions for Pension (EPS)
- Must be an EPF member.
- Must be in job for at least 10 regular years.
- Pension is available at the age of 58. Option to take pension after 50 years and even before the age of 58.
- On taking the first pension, you will get the reduced pension. For this, Form 10D has to be filled.
- 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.