Employee Pension Scheme: Discussion is going on for a long time to remove the limit of pension fund. In the year 2017, it was placed in the board meeting. But, the final decision has not been taken yet.
There is big news for more than 6.5 crore subscribers of Employees’ Provident Fund Organization (EPFO). A big decision can be taken soon regarding the ceiling of your pension fund. If the sources of EPFO are to be believed, then the government wants to bring more and more people under the ambit of PF. In this direction, the limit of pension can be increased from the basic salary of Rs 15,000 to 21 thousand. According to the existing rules, pension is made on a maximum basic salary of Rs 15,000 in EPS pension. With this, only a maximum of Rs 1250 can be deposited in the pension fund every month. If it is changed then the limit may increase to Rs 21,000.
What is the ceiling of basic salary?
When a member contributes to EPF contribution, some money aside from his EPF goes to EPS. This is the part that gets deposited from the employer’s account. But, the maximum limit for its deposit and pension fund is Rs 15000. Now it can be extended. Think of it like this, if a person’s basic salary is Rs 30000, then 12 percent of his contribution on that salary is deposited in the Provident Fund. The same share is also done from the employer’s account. But, the employer’s share is deposited in two places. First- EPF and second- Pension (EPS).
2083 rupees will be deposited instead of 1250 rupees
The employer’s 12 percent share will also be deposited on the basic salary of Rs 30000. But, the ceiling of basic salary in pension fund is Rs 15000. Due to the limit, 8.33 percent of the basic salary (15000) is deposited only at Rs 1,250. If the limit increases, then this part can be fixed at a limit of Rs 25,000. Meaning Rs 2,083 will be deposited in the pension fund.
How is the contribution calculated?
Basic Salary – Rs 30000
Employee’s contribution – Rs 3600 at the rate of 12%
Employer’s contribution – 12 per cent of 3.67 per cent Rs 2350
Contribution in pension – Rs 1250 at the rate of 8.33 percent
Recommendation to increase the limit to 21 thousand
According to a trustee of EPFO, at present the ceiling of basic salary is Rs 15,000, which has been proposed to be increased to Rs 21 thousand. If the decision is taken on extension, then surely the pension amount will increase. Apart from increasing the pension fund, the other advantage is that for those whose salary is above the basic salary ceiling, PF contribution is optional. In such a situation, now more people will be able to come in this circle.
EPFO’s subscriber base will increase
According to Bhanu Pratap Sharma, Retired Enforcement Officer of Employees’ Provident Fund Organization, if this decision is taken, then 6.5 crore EPFO subscribers will get the benefit. The first is that more people will come under its purview and secondly, if the share of the employer increases, then the pension fund (EPS) will also increase. However, it may take time to implement this decision.
Universal wage formula will apply
If sources are to be believed, the members of the Central Board of Trustees (CBT) are in favor of increasing the limit on the pension fund. There are two types of reasoning behind this. First- The formula of Universal Minimum Wage which is to be implemented across the country, in which salary can be fixed around 18 thousand rupees. In such a situation, there is a need to increase the existing salary ceiling. Through this, it will help to bring more and more people to EPFO and social security will increase.
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