Pension Calculation

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 The pension provided by EPFO under the Employees' Pension Scheme (EPS) is calculated based on a specific formula. Here's a breakdown of how your EPS pension is determined:

Formula to Calculate EPS Pension:

The pension is calculated using this formula:
Monthly Pension = (Pensionable Salary × Pensionable Service) ÷ 70

Key Terms in the Formula:

  1. Pensionable Salary:

    • This is the average of your last 60 months' basic salary + dearness allowance before exiting the scheme.
    • The maximum pensionable salary is capped at ₹15,000 (as per the current rules).
    • If your basic salary is higher, pension contributions will still be calculated on ₹15,000.

  2. Pensionable Service:

    • Total years of contribution to the Employees’ Pension Scheme.
    • A minimum of 10 years of service is required to qualify for a pension.
    • Service exceeding six months is rounded to the next year. For example, 9 years and 8 months will be counted as 10 years.

Example Calculation:

Suppose:

  • Pensionable Salary = ₹15,000
  • Pensionable Service = 20 years

Monthly Pension = (₹15,000 × 20) ÷ 70 = ₹4,285.71
So, you will receive approximately ₹4,286 per month as your pension.

Factors Affecting Your Pension:

  1. Maximum Pensionable Salary: If your basic salary exceeds ₹15,000, the pension does not increase proportionately.
  2. Service Duration: Longer service duration leads to a higher pension.
  3. Contribution to EPS: Only 8.33% of the employer's contribution to EPFO goes toward EPS.

Key Points to Note:

  1. Minimum Pension:

    • The government provides a minimum pension of ₹1,000 per month under EPS.

  2. Maximum Pension:

    • Based on the ₹15,000 cap, the maximum pension is usually around ₹7,500 per month (for 35 years of service).

  3. Higher Pension Option:

    • After the Supreme Court's 2022 ruling, eligible employees can opt for a higher pension based on their actual salary if they contributed to EPF without the ₹15,000 cap. This requires additional contributions and approval from EPFO.

How to Check Your EPS Pension?

You can calculate your expected pension using the EPFO's Pension Calculator available online. You may also find your EPS details in the UMANG app or through the EPFO portal.

Would you like assistance with accessing or using the EPFO portal to calculate your pension?

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