There is a long pending debate over whether to increase the limit of investing under the Employee Pension Scheme (EPS). Retirement fund organisation, EPFO is considering a financial investment product for the employees working in different organised sectors having basic wages of more than ₹15,000 P.M.
EPFO New Investment Scheme
As per the new scheme, this time EPFO is aiming to cover all the employees who are considered eligible under the Employees Pension Scheme 1995 (EPS-95), as this scheme only covers the employees having basic wages of upto ₹15,000 monthly.
The Demand Of Higher Pension
Press Trust of India released a February report which tells about the demand for higher pensions. As per PTI, “There has been a demand for higher pension on higher contributions among the members of the Employee’s Provident Fund Organisation (EPFO). Thus, it is under active consideration to bring out a new pension product or scheme for those whose monthly basic wage is more than ₹15,000.”
EPS Eligibility Criteria
These are the conditions to become eligible under Employee Pension Scheme:
- Must be a member of EPFO
- Aged 58 years
- 10 years of service completion is necessary.
- A member can delay pension for two years until he turns 60 years old, then only you will receive a pension with an interest rate of 4 per cent annually.
- After turning 50, a member can also avail pension at a low-interest rate.
Current Regulations of EPS
Getting a job automatically makes you a member of EPF, contributing your 12 per cent of salary as a monthly deposit. The benefit is that your company also contributes the same for you.
A segment of your contribution is also made towards EPS Fund. The maximum pension share for every month will be equal to ₹1250 as the maximum pension salary amount is ₹15,000. (8.33% of 15000)
After retirement, the maximum salary amount for calculating pension is ₹15,000 for an employee. Hence the calculation suggests that the maximum pension an employee will receive is ₹7,500 under EPS.
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How To Calculate Pension Under EPS?
Before September 1, 2014, the maximum cap on the monthly salary being contributed towards EPF by an employee as a pension contribution was ₹6,500. After the said date the maximum limit was settled at ₹15,000.
Monthly Pension = [Pensionable Salary * Years Of EPS Contribution]/70
