If you want to increase the contribution in your EPS by taking advantage of the Higher Pension Scheme, then June 26 is the last date for the application. EPFO has also issued a formula to calculate the pension received under the Higher Pension Scheme.
New Delhi. Employees’ Provident Fund Organization (EPFO) has issued a formula to calculate pension on higher salary. This formula will be useful for those who want to take advantage of the Higher Pension Scheme. Let us tell you that the last date to enroll for this scheme is 26 June. If you were a member of EPFO on or before September 1, 2014, then you can apply for this scheme.
What is the pension formula?
Pension = Pensionable Salary (Average of last 60 months salary) X Years (Number of years contribution deposited)/ 70 For those who retired before September 1, 2014, their pension will be based on the average salary of 12 months prior to retirement. will be calculated from
What is Higher Pension Scheme?
Suppose the basic salary of an employee is Rs.1,00,000. So 12 percent of this one lakh ie Rs 12,000 is the EPF contribution of the employee. The same amount is deposited in EPF and EPS by the employer. As per the rules, the employer contributes 8.33 per cent of the basic salary towards EPS and the rest towards EPF.
A rule came in 2014. It was said in this rule that salary above Rs 15000 basic will not be eligible for EPS. That is, up to the salary of 15000 only 8.33 percent i.e. a maximum of Rs 1250 can be deposited in EPS every month. Apart from this, all the money will go to EPF. That is, even if the EPS contribution of one lakh basic salary becomes Rs 8,330, the employer will deposit only Rs 1250 in EPS and the remaining money will be deposited in EPF.
However, those who joined EPFO from September 1, 2014 and earlier had the option to apply for EPS contribution on higher salary within six months. Many employees also applied, but EPFO rejected such applications. Many employees reached the court against this, in November 2022, the Supreme Court accepted the rule of maximum pensionable salary of 15000 as correct. However, the court said that employees who became members of EPFO on and before September 1, 2014, and their employers can apply for the Higher Pension Scheme by giving a joint application to EPFO.
Under the Higher Pension Scheme, an amount of 8.33 percent of the basic salary of an employee will be contributed by his employer to his EPS account. That is, if an employee chooses the option of higher pension scheme, then if his basic salary is one lakh, 8.33 percent of the basic salary i.e. Rs 8330 will be deposited in EPS. The remaining 3.7 percent in EPF account. This scheme is not for those who joined EPS after September 1, 2014. On choosing the higher pension scheme, a contribution of 1.16 percent will also be taken from the employee.
How to apply?
If you are eligible for the Higher Pension Scheme and want to apply for it, then you have to apply by visiting the EPFO portal. Necessary documents have to be given. In UAN, just go to the e-Sewa portal and go to the member interface and apply. Earlier the last date for this was May 3, which has been extended to June 26.
After the application is submitted, verification will be sought from the employer of the employee. EPFO officers will verify the application, once everything is correct, the process of transferring the dues will start. If there is any discrepancy in the forms, the employee and his employer will be given one month to rectify it.
