EPFO Higher Pension Deadline: EPFA’s higher pension scheme (Pension Scheme) has been in the limelight for the last several months. After the decision of the Supreme Court regarding the facility of more pension in November last year, it is being discussed continuously.
The Employees’ Provident Fund Organization (EPFO) has extended the deadline several times for opting for higher pension under the Employees’ Pension Scheme (EPS), and now it is very close. Now EPFO has told how the calculation of higher pension will be done. Let’s try to understand it…
The Ministry of Labor had told this thing
Earlier last month, the Ministry of Labor had also issued a clarification regarding the calculation of higher pension. The Labor Ministry had said that out of the total 12 per cent employer’s contribution to PF, an additional contribution of 1.16 per cent would be used to calculate the higher pension, which would be in line with the Supreme Court’s November 4, 2022 decision. Along with this, the Ministry of Labor had also told that this step to reduce the burden on the subscribers of the Employees Pension Scheme will be retrospective, that is, this decision will not be applicable from the day of its arrival, but from the back.
This is how pension will be calculated
Now EPFO has explained this in detail. EPFO has said that for those who retire before September 1, 2014, the pension will be calculated on the basis of average monthly salary up to 12 months before the date of retirement or exit from the pension fund. On the other hand, for those who will retire after this date, the calculation will be done on the basis of average monthly salary of 60 months before retirement.
only so many days left
The deadline for opting for higher pension was ending on 03 May. EPFO had extended it till 26 June 2023. Its deadline was extended for the second time. First of all, in an order given on 4 November 2022, the Supreme Court had fixed the deadline till 3 March in this regard. EPFO had then extended the deadline till May 3 to opt for higher pension. Now its deadline is ending on 26 June.
Money will go to pension fund from here
The Ministry had told that along with the Employees’ Provident Fund and Other Provisions Act, it has been told in the Social Security Code that contribution cannot be taken from the employees for the Pension Fund. Keeping this in mind, it has been decided that an additional 1.16 per cent will be taken from the 12 per cent contribution of the employers towards the Pension Fund, which is going to the Provident Fund.
In hand salary will not be affected
Let us tell you that in EPS the employee does not make any contribution on his behalf. Out of the total 12 per cent contribution made by the company, only 8.33 per cent goes to EPS. Whatever amount is more than this in the contribution of the company, it goes to EPF. The Ministry of Labor has clarified that the increased contribution to EPS will also go from the company’s share, which means that there will be no impact on take home salary or in hand salary even if you opt for higher pension.
In this case there will be loss
Although it also has its disadvantages. If you choose the option of higher pension, then the amount deposited in PF by the company will be less, which will affect your PF fund. Employees get the benefit of compound interest in PF. Now since part of PF will go to EPS, the benefit of compounding will also reduce. Similarly, the lump sum amount that is received from PF on retirement or already leaving the job, this amount will also be affected if the option of higher pension is selected.
