Employee Pension Scheme: EPFO provides many facilities to the employees working in the private sector. EPS is a pension scheme run by EPFO. Actually, every month 12 percent of the employee’s basic salary + DA is deposited in the PF account.
The employer’s contribution is also the same. Out of this, 8.33% goes to the employee’s pension fund (EPS Fund) and the remaining 3.67% goes to the PF account. After the age of 58, the employee gets the amount deposited in the PF account in lump sum, but the amount of his PF is decided under a formula based on his contribution. Let us tell you what is that formula and how much pension will you get after retirement? Learn its calculation here.
This is the pension formula
The formula for how much pension you will get after retirement is – Monthly salary of the employee = Pensionable salary X Pensionable service /70. According to the existing rules, 8.33% of the salary of any employee is deposited in his pension account. However, the maximum limit of pensionable salary is 15 thousand rupees. In this case, if a person’s salary is Rs 15000, then 15000 X 8.33 / 100 = Rs 1250 will go to his pension account every month.
Now if the calculation is done according to the pension formula, then if someone’s monthly salary (average salary of the last 60 months) is Rs 15 thousand and the duration of the job is 20 years, then 15000X 20/70 = Rs 4286 will be the monthly pension.
On the other hand, if the duration of the person’s job is 25 years, then 15000 X 25/70 = Rs 5357 and if the duration is 30 years, according to this formula, his monthly salary will be Rs 6428. 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 this. (30,000 X 30)/70 = 12,857
These are the essential conditions for pension
- Must be an EPF member.
- It is necessary to stay in regular job for at least 10 years.
- Pension is available at the age of 58 years. Option to take pension after 50 years and even before the age of 58.
- On taking the first pension, the reduced pension will be given. For this Form 10D has to be filled.
- On the 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.
