Employee’s Pension Scheme: At present, pension is available on the basis of 15000 basic salary in the Employee’s Pension Scheme (EPS). Thus the maximum pension amount on retirement is not very high.
Employee’s Pension Scheme: Private sector employees can get relief. The pension (EPS) of lakhs of employees contributing to the Employees’ Provident Fund (EPF) can increase by 300% in one stroke. In the Employees’ Pension Scheme of Employees’ Provident Fund Organization (EPFO), the maximum pension has been sealed at Rs.15 thousand (Basic Salary). Meaning, even if your salary is more than 15 thousand rupees (Basic salary) month, but your pension will be calculated only on the maximum salary of 15 thousand rupees.
EPS pension can increase manifold
Supreme Court can do away with the ceiling of pension. This matter is under consideration and hearing is going on continuously. The calculation of the employees’ pension (Employee’s Pension Scheme) can also be done on the last salary i.e. high salary bracket. With this decision, it is possible to increase the pension of the employees manifold. The condition for getting pension under EPS is that it is necessary to contribute to the Employees’ Provident Fund (EPF) for 10 years. At the same time, on completing 20 years of service, a weightage of 2 years is given. Let us understand how much difference will be made by removing the ceiling.
How will your EPS pension increase?
According to the current system, if an employee is doing a job since June 1, 2015 and if he wants to take pension after completing 14 years of service, then his pension would be calculated on Rs 15,000 only. Whether the employee is in basic salary of 20 thousand rupees or 30 thousand rupees. According to the old formula, the employee will get a pension of about Rs 3000 from June 2, 2030, on completion of 14 years. The formula for calculation of pension is- (Service Historyx15,000/70). But, if the ceiling of pension is abolished, then the pension of the same employee will increase.
Suppose the salary (Basic Salary + DA) of an employee is at 20 thousand rupees. Calculating with the formula of pension, his pension will become Rs.4000 (20,000X14)/70 = Rs.4000. Similarly, the higher the salary, the more he will get the benefit of pension. There can be a 300% jump in the pension of such people.
Suppose the job of an employee is 33 years. His last basic salary is 50 thousand rupees. Under the current system, the calculation of pension would have been done only on the maximum salary of 15 thousand rupees. In this way (Formula: 33 Years+2= 35/70×15,000) the pension would have been Rs 7,500 only. This is the maximum pension in the current system. But, after removing the pension ceiling, adding pension according to the last salary, they will get a pension of 25000 thousand rupees. Means (33 years+2= 35/70×50,000= Rs 25000).
333 percent salary will increase
Let us tell you that according to the rules of EPFO, if an employee contributes to the EPF continuously for 20 years or more, then two more years are added to his service. In this way, 33 years of service was completed, but pension was calculated for 35 years. In such a situation, the salary of that employee can increase by 333 percent.