A Supreme Court decision allows employees who have been EPF members since before 1 September 2014 to choose to contribute 8.33% of their real Basic+DA payments to EPS.
In light of this, the following examples with a higher pension calculator show how much more pension you may receive by selecting the EPFO higher pension option.
Assume your basic pay is Rs 60000.
What is currently happening today is that every month, 12% of your basic pay (Rs 7200) is deposited into your EPF account. The employer’s payment, which is likewise equivalent to 12% of your Basic Salary, is Rs 1250, with the rest Rs 5950 going to your EPF account.
Trending Post: EPFO Higher Pension Link: Here’s Why You Should Apply
What happens if you choose the higher pension
Because the Supreme Court has said that employees would be able to choose a higher EPS contribution based on their actual pay, 8.33% of your basic salary, i.e. Rs 4998, can be allocated to EPS. However, there is a catch.
If you choose the higher pension option, the EPFO will take the money from your PF account from your joining date or November 1, 1995, whichever is later.
How much pension can you expect to receive:
The formula for determining EPS pension is “Pensionable Salary X Pensionable Service)/70.”
If you do not choose the greater pension:
The EPS pension is based on the average of 60 months’ average pensionable wage at the time of retirement. For example, if you joined EPS at the age of 25 and retired at the age of 58, you may receive Rs 7071 each month [(Rs 15000×33)/70].
People Also Reading: EPF Higher Pension Scheme: Guidelines, Eligibility, Benefits & Calculation
If you choose the higher pension (higher pension calculator):
If you opt for the higher pension, the pension you will get upon retirement will be determined on the basis of your actual Basic Salary plus Dearness Allowance (if applicable). For example, if your average pensionable pay (Basic+DA) over the previous 60 months is Rs 60,000 at the time of retirement, your pension would be Rs 28,285 [(Rs 60000×33)/70].
If your pensionable wage is Rs 50,000, you may be eligible for a pension of Rs 23,571 [(Rs 50000×33)/70].
This is how EPFO higher pension calculator works.