Employee Pension Scheme: Decision on removing capping on Employee Pension Scheme (EPS) can be taken soon. The Supreme Court bench can take a decision in this matter which has been stuck for a long time.
Although, it is difficult to say in whose favor the decision will be taken, but their arguments have been submitted from both the sides. Due to the lack of funds with the EPFO, this matter has been hanging for the last few years. It is expected that on the monthly capping of EPS pension of Rs 15000, the board of EPFO will take a decision on CBT.
It can be included in the next meeting of CBT. The Supreme Court will give its verdict on the petitions of the Union of India and the Employees’ Provident Fund Organization (EPFO).
What are the rules regarding Employee Pension Scheme?
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 is 8.33% in EPS. 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.
According to the pension rules on the maximum range, 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 will happen if the limit of 15,000 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 pension calculated in EPS?
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 withdrawal?
If you want to withdraw EPF amount, then you can withdraw the amount deposited in your account anytime. Whether your job is 6 months or 10 years. But, you may face some difficulty to withdraw the amount of pension. Because, there are many rules for this, which you should understand.
