Pension Scheme: Big Update For Pension..! Proposal for change in formula for giving money


Pension Plan: Employees’ Provident Fund Organization (EPFO) is seriously considering a change in the existing formula for monthly pension determination.

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Under this, it is proposed to determine the monthly pension on the basis of average pensionable salary received during the entire pensionable service. However, the final decision in this regard will be taken after the report of the ‘Actuary’ assessing the pension, the amount paid for it and the risk. A source related to the case gave this information.

EPFO Employees Pension Scheme

Currently, EPFO ​​uses the formula pensionable salary (average salary of last 60 months) times pensionable service / 70, for determination of monthly pension under Employees’ Pension Scheme (EPS-95). According to the source, “There is a proposal to change the formula for monthly pension under EPS (95). In this, there is a plan to include the average pensionable salary received during the pensionable service in place of the average pensionable salary of the last 60 months.

However , he clarified, “It is only at the stage of proposal and no final decision has been taken on it yet.” The final decision will be taken after the report of the ‘Actuary’.” It is noteworthy that if EPFO ​​changes the formula for pension, then it will definitely determine the monthly pension of all, including those who opt for higher pension, according to the existing formula. There will be less competition. It can be understood with an example.

Understand like this, let us assume that the average salary for the last 60 months of the person opting for higher pension is Rs 80,000 and his pensionable job is 32 years. In this case, under the existing formula (80,000 times 32/70), his pension will be Rs 36,571. On the other hand, when the average of salary is taken during the entire pensionable job, then the determination of monthly pension will be less because the salary (basic salary and dearness allowance) is less in the initial days of the job.

Option for higher pension

It is noteworthy that in November last year, the Supreme Court had asked the government to give four months time to the subscribers to opt for higher pension. EPFO has provided online facility for subscribers to fill joint option form with employers to opt for higher pension. The deadline for this was earlier May 3, 2023, which has been extended to June 26, 2023.


At present, EPFO ​​subscribers contribute to the pension on the fixed limit of Rs 15,000 per month, while their actual salary is much more than this. With the option of higher pension, they will be able to get higher monthly pension. Employees contribute 12 percent to the social security scheme of EPFO. At the same time, out of 12 percent contribution of the employer, 8.33 percent goes to EPS. The remaining 3.67 percent goes to the Employees’ Provident Fund.


The government contributes 1.16 per cent as subsidy to the Employees’ Pension Scheme on a limit of Rs 15,000 basic salary. When asked about the need to change the formula, the source said, “It is actually believed that giving more pension for a long time will lead to financial burden.” That’s why a new formula is being considered.” Responding to a question regarding the Rs 6.89 lakh crore fund lying in the Pension Fund, the source said that this money does not belong only to the pensioners but to all the shareholders associated with the EPFO ​​and the employees. Nidhi Sangathan has to take care of all.

Pension Fund

It is noteworthy that according to the EPFO’s 2021-22 report, Rs 6,89,211 crore is deposited in the Pension Fund. EPFO received an interest of Rs 50,614 crore in 2021-22 on the EPS fund.

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