EPFO has told how you will be able to calculate the arrears of higher pension and how much amount will be given to you under this. If someone has opted for higher pension and is eligible, then money will be transferred from his PF account for higher pension. Let us know how the outstanding amount will be calculated.

How will the outstanding amount be calculated? 

According to the circular issued by EPFO ​​on May 11, 2023, the arrears amount will be calculated after verification of the salary details given by the employer by the field office and taking care of some things in the process.

Keeping in mind what things will be calculated 

The case of each member or pensioner eligible for higher pension of EPFO ​​will be added in a separate file, which will be created in the e-office for clarity of Application ID. In case of exemption, the information about the salary for the entire period and the information with the institutions getting the contribution exemption should be clear. If all the things are not found according to the records, then there may be a problem in getting the higher pension.

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How will the deposit amount be calculated? 

• The employer’s share of 8.33 per cent on the higher salary will be calculated as per the records.
• 15,000 per month with effect from March 1, 2014, the employer’s share will be calculated according to the enhanced contribution of 1.16%.
• All amounts already deposited in the Pension Fund will be deducted from the sum of the above two.
• After all calculations, the interest on the outstanding amount will be the interest earned by the members on their PF.

How will the interest be calculated 

For non-exempt institutions, the interest will be calculated at the rate declared under Para 60 of the EPF Scheme, 1952. Further, interest for exempted establishments shall be calculated at the rate declared under para 60 of the EPF Scheme 1952 or the rate declared by the Trust of Exempted Establishments from time to time, whichever is higher. Significantly, EPFO ​​is yet to tell how the higher pension will be calculated. Another circular may be issued soon regarding the calculation of higher pension.

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Employees’ Provident Fund Organization (EPFO) has once again extended the deadline for the option of getting more pension under the Employees’ Pension Scheme (EPS). Amidst all this, the question that is troubling people the most is how will the calculation of higher pension be done… The Labor Ministry has now shared its formula with the people.

Clarification of Ministry of Labor

The Labor Ministry on Wednesday made it clear that it will use an additional 1.16 per cent contribution from the employer’s total contribution of 12 per cent to the PF to calculate the higher pension. This will be in line with the Supreme Court’s decision of 4 November 2022. Along with this, the Ministry of Labor has 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 arrival but from the back.

Money will go to pension fund from here

The ministry said in its statement 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.

There will be no burden on the employees

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.

There will be loss

Although it also has its disadvantages. If you choose a higher pension option, 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.

Deadline extended till this date

The deadline for opting for higher pension was ending on 03 May. EPFO has increased this and now interested subscribers can opt for higher pension till 26 June 2023. Its deadline has been 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 it has been pushed further.

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The post Higher Pension Calculation: How will be the calculation of more pension? Labor Ministry told this thing first appeared on Rightsofemployees.com.