Some money from the salary of people doing private jobs is deposited in EPF every month. The employer also contributes almost the same amount to the employee’s EPF account. This is 12 percent of the basic salary (plus DA).
A large part of the fund created in this way is given to the employee in lump sum when he retires. Out of the employer’s 12 percent contribution, 8.33 percent goes to the Employee’s Pension Fund (EPS). The employee gets pension every month after retirement from the money deposited in this pension fund.
How is pension calculated?
For this calculation, the basic salary limit is fixed at Rs 15,000. This means that Rs 1,250 is deposited in the employee’s pension fund every month. Employees who selected the option of higher pension on actual basic salary last year, more money goes to the pension fund every month. An employee is entitled to pension if he is a member of EPS for at least 10 years. The formula for pension is as follows. Pension = (Pensionable Salary (Average of last 60 months’ salary) X Pensionable Service) / 70.
How much pension is received after the death of the employee?
After retirement, the employee gets pension as per the prescribed formula. Under the Employees Pension Scheme, 1995, not only the employee but also his wife/husband and children are entitled to pension when the employee dies before or after retirement. From the retirement of the employee till his death, pension is received as per the formula mentioned above. However, the payment of pension does not stop completely after his death. If the wife/husband or children are less than 25 years of age, they will be entitled to pension.
What is the minimum pension?
The family will get pension if the EPS member has contributed to EPS even once before his death. If the employee dies during the job, then the wife will get a minimum pension of Rs 1,000 every month. The employee’s wife gets pension as long as she is alive. If she gets married again, then the children pension will be converted into orphan pension. Then the pension amount will increase.
What will happen if the employee is unmarried?
If the employee is single, the widow pension i.e. the pension received by the wife is paid to the dependent parents. As a pensioner, you cannot nominate any person for this. If the EPS member is not unmarried or divorced, then the pension money will be given to the wife and children under the EPS rules. The wife gets 50 percent of the pension received by the employee. The children get 25 percent of the widow pension. This pension is available till the children turn 25 years old.
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