The Employees’ Provident Fund Organisation (EPFO) has introduced a significant development regarding the pension scheme. Employees can now choose a higher pension on their actual salary instead of the existing statutory limit.
This article provides an overview of the EPS pension scheme news, explains the formula of pension calculation, and shares the deadline for filing joint applications.
Key Takeaways
- EPFO introduces a new option for a higher pension based on actual salary instead of the statutory limit.
- The formula for pension calculation differs based on the retirement date.
- Employees must file a joint application by July 11, 2023, to opt for the higher pension option.
- Eligible employees can apply online through the EPFO’s member portal.
- The revised option allows employees to contribute a percentage of their actual salary towards the pension pool.
- Errors in the application can be corrected, but it depends on whether the employer has validated it.
What is the EPS Pension Scheme?
The Employees’ Pension Scheme (EPS) was established in 1995 to provide pension benefits to employees. Until now, the pension was calculated based on a statutory limit of Rs 15,000. However, EPFO has introduced an alternative for employees who wish to receive a higher pension based on their actual salary.
EPS Pension scheme empowers retirees to build a robust retirement portfolio tailored to their actual salary, ensuring financial security for the future
The Formula for Pension Calculation
The calculation of the higher pension will differ based on the date of retirement. For those who retired before September 1, 2014, the pension will be calculated using the average monthly pay drawn in the 12 months preceding retirement. On the other hand, for those who retire after this date, the pension will be based on the average monthly pay during the 60 months prior to retirement.
Previously, the pension calculation was determined by multiplying the pensionable salary (average of the last 60 months’ salary) with the number of years of contribution and dividing the result by 70. The revised formula will be applied to calculate the higher pension on actual salary.
News Pension- Deadline for Filing Joint Applications
To opt for the higher pension option under the EPS pension scheme, employees need to file a joint application by July 11. Initially, the deadline was May 3; then, it was extended to June 26; however, it has been further extended to allow employees more time to make their decision and remove any difficulties that the eligible members or pensioners might be facing. After the application is filed, it must be validated by the employer and assessed by EPFO’s field officers within 20 days.
Eligibility and Application Process
Employees who were members of EPFO and EPS before September 1, 2014, and continue to be in service can apply for the higher pension option if they missed it earlier. Retirees who signed up for the higher pension option before the specified date must validate their information.
The application process involves filing an online application through the EPFO’s member portal.
Benefits and Contributions
Currently, the pension is calculated based on the statutory wage ceiling of Rs 15,000. With the revised option, employees can direct 8.33 percent of their actual salary towards the pension pool, potentially leading to a higher pension post-retirement. Additionally, 1.16 percent of the employer’s contribution will be allocated to EPS, while the remaining 2.51 percent will be directed to the EPF.
Important Note On Pension News
If errors are identified in the application after filing, employees can delete and resubmit it. However, this option may not be available if the employer has already validated the application. The EPFO officers will evaluate and approve the applications, paving the way for a higher pension.
Conclusion
The EPFO’s announcement regarding the calculation of a higher pension on actual salary brings new possibilities for employees under the EPS pension scheme. By understanding the formula for pension calculation and adhering to the deadline for filing joint applications, employees can make an informed decision and potentially secure a higher pension post-retirement.
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