Pension contribution by the account holder of retirement fund body Employee Provident Fund Organization or EPFO is diversion from the PF portion of the employer. There is no contribution in the pension on the part of the employee. Here are some facts about the pension scheme being offered by the retirement fund body, about which people know less.
1. An EPF member cannot become a member of the Pension Scheme only without becoming a member of the Provident Fund Scheme. If a new employee is joining an establishment with a minimum salary of Rs 15000 per month, then he can become a member of PF only after submitting the option as per the provisions of Para 26 (6) of the PF Scheme.
2. Since the contribution to pension is made from the employer’s share of contribution, the question does not arise whether an EPF member can refuse to contribute to the pension component.
3. If an employee joins any organization at the age of 58 years, then he will not be eligible to become a member of the Pension Fund.
4. Individual members cannot take exemption from pension scheme, but an establishment can claim exemption.
5. A member is eligible for pension on retirement at the age of 58 years. If the employee leaves the job between 50 to 57 years, then he can avail the benefit of early (reduced) pension.
6. The formula for calculation of pension amount is –
Pension = (Pensionable Salary) (Average of last 60 months) X Pensionable Service / 70.
7. In case of death of the member, the family will not be able to contribute even after receiving 1 month contribution. pension and child pension is payable.
8. On the death of the EPFO member, the pension will go to his wife / widow / widower.
9. Children are also eligible to receive pension till the age of 25 years.
10. The pensioner can get pension anywhere in the country.