Employee’s Pension Scheme: Private Sector Employees can get relief soon. With one decision, the pension (Pension, EPS) of lakhs of employees contributing to the Employees’ Provident Fund (EPF) can increase by up to 333% in one stroke.
The Employees’ Provident Fund Organization (EPFO) has fixed the maximum salary of Rs 15,000 (Basic Salary) for the Employees’ Pension Scheme. Meaning, even if your salary is more than 15 thousand rupees a month, but your pension will be calculated only on a maximum salary of 15 thousand rupees. EPFO is in the process of abolishing this salary limit. Sources say that the calculation of Employees’ Pension Scheme will be done on the last salary i.e. high salary bracket. With this decision, the employees will get many times more pension.
Let us tell you, to get pension, 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. If a decision is taken to remove the limit, then how much difference will it make, let us understand…
How will the pension be calculated?
According to the current system, if an employee is doing a job from June 1, 2015, and if he wants to take pension after completing 14 years of service, then his pension would be calculated at Rs 15,000 only, even if he earns Rs 20,000. Be it in the basic salary bracket or 30 thousand rupees. According to the old formula, the employee will get a pension of about Rs 3000 from June 2, 2030, on completion of 14 years. The formula for calculating pension is – (Service History x 15,000/70). But, if the Supreme Court decides in favor of the employees, then the pension of the same employee will increase.
Example No. 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 No. 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).
Pension will increase up to 333%!
Explain that according to the rules of EPFO, if an employee contributes to EPF continuously while working for 20 years or more, then two more years are added to his service period. In this way he completed 33 years of service, but the pension was calculated for 35 years. In such a situation, the salary of that employee can increase up to 333 percent.
What is the whole matter?
The Employees’ Pension Amendment Scheme, 2014 was implemented by the Central Government by issuing notification from 1st September 2014. This was opposed by the private sector employees and in the year 2018 it was heard in the Kerala High Court. All these employees were covered by the facilities of EPF and Miscellaneous Provisions Act, 1952.
The employees protested against the rules of EPFO, saying that this ensures less pension to them. Because even if the salary is more than 15 thousand, but the calculation of pension has been fixed on the maximum salary of 15 thousand rupees. However, before the amendment made by the Central Government on September 1, 2014, this amount was Rs 6,500. Considering the rules of EPFO as unjustified, the Kerala High Court approved the writ of the employees and gave its verdict. On this, EPFO filed an SLP in the Supreme Court, which was rejected by the Supreme Court.
