New Delhi : The investment limit under Employees Pension Scheme (EPS) may be removed soon. The hearing in this regard is now going on in the Supreme Court. It is being told that a decision can be taken on this soon. But what does this hearing and this case have to do with you and how it will affect your life, let us explain to you.
What is the matter of removing the EPS limit?
Before proceeding on this matter, let us know what is this whole matter. At present, the maximum pensionable salary is limited to Rs 15,000 per month. Means whatever your salary is, but pension will be calculated according to only Rs 15,000. The matter of removing this limit is going on in the court.
The Supreme Court had on August 12 last year adjourned the hearing of a batch of petitions filed by Union of India and Employees’ Provident Fund Organization (EPFO), which said that the pension of employees would be Rs 15,000. may not be limited to Rs. The hearing of these cases is going on in the court.
Now what are the rules regarding EPS?
When we start a job and become a member of EPF, we also become a member of EPS. The employee gives 12% of his salary in EPF, his company also gives the same amount, but 8.33 percent of his share also goes to EPS.
As we have mentioned above that at present the maximum pensionable salary is only Rs 15 thousand i.e. every month the share of pension is maximum (8.33% of 15000) Rs 1250.
Even when the employee retires, the maximum salary is considered for calculation of pension. According to this, an employee can get a maximum pension of Rs 7,500 under EPS, if it is Rs 15 thousand.
This is how pension calculation happens?
One thing to note is that if you have started contributing to EPS before 1st September 2014, then the maximum limit of monthly salary for pension contribution for you will be Rs 6500. If you have joined EPS after 1st September 2014 then the maximum salary limit will be 15,000. Now see how pension is calculated.
EPS Calculation Formula
Monthly Pension = (Pensionable Salary x Year of EPS Contribution)/70
Here assume that the employee started contributing to EPS after 1st September, 2014, then the pension contribution would be 15,000
assuming he has worked for 30 years.
Monthly pension = 15,000X30/70 = Rs 6428
Maximum and Minimum Pension
One more thing to be remembered is that the employee’s service of 6 months or more will be considered as 1 year and if it is less then it will not be counted. That is, if the employee has worked for 14 years 7 months, then he will be considered as 15 years.
But if you have worked for 14 years 5 months then only 14 years of service will be counted. The minimum pension amount under EPS is Rs 1000 per month, while the maximum pension is Rs 7500.
8,571 will get pension
If the limit of 15 thousand is removed and your basic pay becomes Rs 20 thousand, then you will get pension as per the formula (20,000 x 30)/70 = Rs 8,571.
Existing Conditions for Pension (EPS)
It is necessary to be a member of EPF for pension
Must have been in the job for at least 10 regular years
Pension is available when the employee turns 58
There is an option to take pension after 50 years and even before the age of 58 years
Keep in mind that you will get less pension on the first pension and for this you will have to fill Form 10D
In case of death of the employee, the family gets pension.
If the service history is less than 10 years, then they will get the option to withdraw the pension amount at the age of 58 years.
