Employee Pension Scheme: Discussion is going on for a long time to remove the limit of pension fund. In the year 2017, it was placed in the board meeting. But, the final decision has not been taken yet.
Employee Pension scheme: There is big news for about 6.5 crore subscribers of Employees’ Provident Fund Organization (EPFO). There can be a big decision regarding the ceiling of your pension fund. The matter is still in the Supreme Court. According to EPFO sources, the government wants to bring more and more people under PF. According to the existing rules, there is a limit of Rs 15000 in EPS pension. In such a situation, only a maximum of Rs 1250 can be deposited in the pension fund every month. Now if the ceiling is decided, then the ceiling of basic salary will increase directly. If sources are to be believed, it can be increased to Rs 25000.
What is the ceiling of basic salary?
At present, there is a ceiling (limit) of basic salary of Rs 15000 for EPF contribution. It can be extended. If the basic salary of a person is Rs 30000, then 12 percent of his contribution on that salary is deposited in the Provident Fund contribution. The same share is also done from the employer’s account. But, the employer’s share is deposited in two places. First- EPF and second- Pension (EPS).
Only 1250 rupees are deposited in the pension fund
The employer’s 12 percent share will also be deposited on the basic salary of Rs 30000. But, the ceiling of basic salary in pension fund is Rs 15000. Due to the limit, 8.33 percent of the basic salary (15000) is deposited only at Rs 1250. But, the limit can be increased to Rs 25000. If this happens, the calculation will be at Rs 25000. Meaning Rs 2082.50 (Rs 2083) will be deposited in the pension fund. This will also increase the pension.
- Understand the current structure in terms of Rs 30000
- Basic Salary – Rs 30000
- Employee’s contribution – Rs 3600 at the rate of 12%
- Employer’s contribution – 12 per cent of 3.67 per cent Rs 2350
- Contribution in pension – Rs 1250 at the rate of 8.33 percent
A decision may be taken on increasing the ceiling
According to KE Raghunathan, a trustee of EPFO, at present the ceiling of basic salary is Rs 15,000, which has been proposed to be increased to Rs 25,000. Supreme Court can decide this. If a decision is taken to increase the pension ceiling, then surely there will be good news for the pensioners. Apart from increasing the pension fund, another advantage is that for those whose salary is above the basic salary ceiling, PF contribution is optional. In such a situation, now more people will be able to come in this circle.
6.5 crore people will get benefit
According to Bhanu Pratap Sharma, Retired Enforcement Officer of Employees’ Provident Fund Organization, if this decision is taken, then 6.5 crore EPFO subscribers will get the benefit. The first is that more people will come under its purview and secondly, if the share of the employer increases, then the pension fund (EPS) will also increase.
Universal Minimum Wage Formula
If sources are to be believed, the members of the Central Board of Trustees (CBT) are in favor of increasing the limit on the pension fund. There are two types of reasoning behind this. First- In the Universal Minimum Wage formula which is to be implemented across the country, the salary can be fixed around Rs 18,000. There is a need to increase the existing salary ceiling in ACE. Through this, it will help to bring more and more people to EPFO and social security will increase.
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