Members of the Employees’ Provident Fund Organization (EPFO) are entitled to a pension upon retirement. All eligible members have until May 3, 2023, to select and jointly apply for increased pensions with their employers via the EPFO unified members’ portal.
Currently, employers contribute 12% of each employee’s base pay and dearness allowance to the EPF. The Employees’ Pension Scheme (EPS) receives 8.33% of the employer contribution, while the Employees’ Provident Fund (EPF) receives 3.67%.
What is EPFO’s more expensive pension plan?
Under Section 6A of the EPF Act, the government established a pension program in 1995. The Employees Pension System of 1995 (EPS-95) mandates that employers contribute 8.33 percent to the pension plan. The monthly maximum pension was Rs. 5,000 or Rs. 6,000 through the EPS-95. 8.33 percent of the initial Rs had to be paid out by employers. 5,000 (subsequently increased to Rs. 6,500) in the plan’s pension.
Here’s an illustration to show you how much pension you could get if you chose the EPFO higher pension option.
For instance, your basic pay is now 40,000 rupees per month, and your EPF account receives 12% of that amount, or 4800 rupees. Rs. are given to EPS. 1250 of the employer’s contribution, or 12 percent of your base salary, is deposited into your EPF account. 3550.
If you choose the higher pension, your actual Basic Salary and any applicable Dearness Allowance will be used to calculate your pension when you retire. For instance, if, at the time of retirement, your average pensionable pay (Basic + DA) was Rs 40,000, the pension would be Rs 18,857 [(Rs 40000*33)/70].
