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Employee Provident Fund (EPF) subscriber? Know how to increase pension under Employee Pension Scheme (EPS)
Now, employees covered by EPFO are eligible for pension as per their full last drawn salaries (actual basic pay + DA).
Learn how to increase pension under Employee Pension Scheme (EPS): Are you authorised for pension under Employee Pension Scheme (EPS) of the Employee's Provident Fund Organisation (EPFO)? As per the Supreme Court decision of early this year, now you can increase your monthly pension amount. You might not know the details of this decision for which the petitioner fought a long legal battle.
This year April, the Supreme Court had supported a Kerala High Court judgement on a monthly pension from the Employees' Pension Scheme 95 (EPS 95). The Kerala high court argued a 2014 notification of the Employee Provident Fund Organisation (EPFO), requesting the pension body to give full pension to EPS subscribers.
Earlier, the EPFO had capped the salary used for computation of pension at Rs 15,000 per month. The EPS contribution was also capped at Rs 15,000. Hence, the EPS contribution limit was not 8.33% of the employer's contribution but Rs 15,000 per year. In April the SC order scrapped this rule.
In consequence of SC verdict, EPS subscribers can get a higher pension. Now, employees covered by EPFO are eligible for pension as per their full last drawn salaries (actual basic pay + DA). But for this, they will have to give up a fragment of their provident fund balance. Confused? Let's understand this:
According to the Employee's Provident Fund rules, a part of the employer's contribution towards EPF is put in the EPS. As per the scheme, the subscriber's pension is calculated based on his last drawn salary and his number of years of the service.
Formula to calculate the pension amount:
Monthly pension = Total no. of job years x last drawn salary divided by 70.
As per now-scrapped EPFO rule, for pension calculation salary considered was just Rs 15,000. So, even if you earned Rs 50,000, only Rs 15,000 per month would have been considered for calculating your pension. Let's assume you worked for 30 years. Then your monthly pension as per the formula would be 30 x Rs 15,000/70 = Rs 6428 per month.
However, in consequence of SC verdict, your pension can go up manifold. It will be calculated based on your actual last drawn Basic + DA. But if you want to get a higher pension, you will have to shift a big chunk of your EPF to EPS account.
You can apply through your employer to the EPFO to deduct a sum retrospectively equal to 8.33% of your basic + DA towards EPS. Shift extra amount from the PF account to the EPS retroactively!
