Good news for the employees. Major changes have been made in the minimum pension amount of the employees. In fact, now after retirement the pension of the employees will be Rs 25 thousand instead of Rs 7500.
Employees Pension Scheme-1995 is for all EPF subscribers of EPFO. In this, people working under the organized sector get pension after the age of 58 years. It is mandatory for the employee to have at least 10 years of service. The employee contributes 12% of his salary to EPF and the employer also contributes the same amount. But, a part of the employer’s contribution is deposited in EPS.
Pension is calculated on Rs 15000-
The maximum pension in the Employees’ Pension Scheme of the Employees’ Provident Fund Organization (EPFO) is made at Rs 15,000 (basic salary). It is sealed. Meaning, even if your salary is more than 15 thousand rupees (Basic salary) a month, but the pension will be calculated only on a maximum salary of 15 thousand rupees.
EPS pension should be calculated on the last salary-
If the Employees’ Pension Scheme is calculated on the last salary i.e. high salary bracket, then they can get a big relief. The condition for taking pension under EPS is that it is necessary to contribute to Employees Provident Fund (EPF) for 10 years. Whereas, after completing 20 years of service, a weightage of 2 years is given. Let us understand that the removal of the ceiling would make a difference.
Limit of 15 thousand rupees on EPS pension-
According to the existing system, if an employee is working anywhere from January 1, 2022, and if he wants to take pension after completing 15 years of service, then his pension would have been calculated at Rs 15,000 only. Even if the employee is in a basic salary of 20 thousand rupees or 30 thousand rupees.
According to the formula, the employee will get a pension of about Rs 3000 from January 2, 2037, on completion of 15 years. The formula for calculating pension is-(Service History x 15,000/70). But, if the ceiling of pension ends, then the pension of the same employee will increase.
Example number-1-
Suppose the salary (Basic Salary + DA) of an employee is at 20 thousand rupees. Calculating from the pension formula, his pension will be Rs.4000 (20,000X14)/70 = Rs.4000. Similarly, the higher the salary, the more he will get the benefit of pension. There can be a 300 percent jump in the pension of such people.
Example number-2-
Suppose an employee has a job of 33 years. His last basic salary is 50 thousand rupees. Under the existing system, the pension would have been calculated only on a maximum salary of Rs 15,000. In this way (formula: 33 years + 2 = 35/70×15,000) the pension would have been Rs 7,500 only. This is the maximum pension in the current system.
But, if the pension ceiling is removed and the pension is added according to the last salary, they will get a pension of Rs 25,000 thousand. Means (33 years+2= 35/70×50,000= Rs 25000).
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