Employee Pension Scheme: The employee’s pension is set when he or she retires. However, because there is a limit, the pension after retirement is not very high. As a result, there’s a push to get rid of the restriction. This month, a CBT meeting will be conducted in which the pension will be discussed.
Employee Pension Plan: EPFO, the pension fund organization, is considering introducing a new pension program for employees in the organized sector. On the other hand, a Supreme Court hearing is being held to abolish the investment cap under the Employee Pension Scheme. We shall explain what this issue is about and how it will affect your life.
Before we go any further, let us first define what this issue is all about. At the moment, the maximum pensionable monthly pay is Rs 15,000 per month. That is to say, whatever your pay is, the pension computation will be based on Rs 15,000 only. The subject of removing this restriction is currently before the court.
The Supreme Court deferred the hearing of a bundle of petitions filed by the Union of India and the Employees’ Provident Fund Organization, which claimed that employees’ pensions could not be limited to Rs 15,000, on August 12 last year. These cases are currently being heard in court.
What are the current EPS regulations?
When we start a job and join the EPF, we automatically join the EPS as well. The employee contributes 12% of his salary to the EPF, which is matched by his employer, but a portion of it also goes to the 8.33 percent EPS. As previously stated, the maximum pensionable pay is currently just 15 thousand rupees, implying that the monthly pension portion is only Rs 1250 (8.33 percent of 15,000).
Even after the person retires, the highest salary used to calculate the pension is Rs 15,000. As a result, the maximum pension an employee can receive under EPS is Rs 7,500.
This is how a pension is calculated.
One thing to keep in mind is that if you started contributing to EPS before September 1, 2014, your monthly salary limit for pension contributions will be Rs.6500. If you joined EPS after September 1, 2014, your maximum compensation will be 15,000 per year. Let’s have a look at how a pension is calculated.
The formula for EPS Calculation
(Pensionable Salary x Years of EPS Contribution)/70 = Monthly Pension
If the employee began contributing to EPS after September 1, 2014, the pension contribution will be Rs 15,000 in this case. Assume he has been employed for 30 years.
15,000X30/70 = Rs 6428 per month in pension
Pension Maximums and Minimums
Another thing to keep in mind is that an employee’s service of six months or more will be counted as one year, while service of less than six months will not be counted. In other words, if an employee has worked for 14 years and 7 months, he or she will be deemed to have worked for 15 years. However, if you have worked for 14 years and 5 months, just 14 years will be counted. The minimum EPS pension is Rs 1000 per month, with a maximum pension of Rs7500.
Pensions will be paid to 8,571 people.
If the 15thousand rupee cap is eliminated and your basic wage is increased to twenty thousand rupees, the pension you will receive will be as follows. Rs 8,571 = (20,000 X 30)/70
Existing Pension Conditions (EPS)
To receive a pension, you must be a member of the EPF.
It is required that you work for at least 10 years on a regular basis.
When the employee reaches the age of 58, he or she is eligible for a pension.
After 50 years, and even before the age of 58, it is possible to retire.
– Keep in mind that you will receive a reduced pension on your first pension, for which you will need to complete Form 10D.
When an employee dies, his or her family receives a pension..
If they have less than ten years of service, they will be able to withdraw the pension amount at the age of 58.
CBT meetings are a good place to make big announcements.
‘There has been a desire for larger pension on higher contribution among EPFO members,’ according to PTI news. As a result, a new pension product or program for those with a monthly basic salary of more than Rs 15,000 is being actively examined. According to insiders, the recommendation for this new pension could be made at the Central Board of Trustees (CBT) meeting on March 11 and 12 in Guwahati, the EPFP’s ultimate decision-making body.
