The Employee Pension Scheme (EPS) is a pension scheme where employees receive a pension based on their years of service after the age of 58. Alternatively, you can take an early pension at 50 years of age. The pension fund is contributed to by both employers and employees. Let’s assume the salary of the individual is Rs 61,000 and calculate the monthly pension for him with varying years of service (17, 27, and 33 years) to figure out what he can receive every month.
How is EPS contribution made?
In saving for retirement, you and your employer make a contribution. Here’s the method: You and your employer contribute 12 per cent of your basic salary to a fund.
Your employer’s 12 per cent is divided into two halves: 8.33 per cent is contributed to the Employee Pension Scheme (EPS) and 3.67 per cent is contributed to the Employees’ Provident Fund (EPF).
Who is Eligible for Employee Pension Scheme (EPS)?
Persons who have reached the age of 50 years for drawing a pension early, and 58 years for drawing a regular pension.
You should be an EPFO member.
You should have served for 10 years.
What are minimum and maximum EPS amounts?
The minimum monthly pension that you will receive is Rs 1,000, and the maximum is Rs 7,500.
EPS calculation conditions
The formula for calculating the EPS pension is:
Monthly pension amount = (Pensionable Salary x Pensionable Service) / 70.
Monthly Pension Calculation: Pensionable service, 17, 27, & 33 years
The monthly pension amount you will receive will depend on your pensionable salary and service. The average salary used in the formula is the average of your basic salary plus your DA for the last 12 months.
Pension Calculation
Contributing to the (present) wage ceiling of Rs 15,000. Even if someone’s basic salary and dearness allowance are Rs 61,000, their EPS pension will be calculated at Rs 15,000.
What will be your monthly pension with 17 years of service?
(Pensionable Salary X Pensionable Service)/70 = (15,000×17)/70 = Rs 3,642.
Individuals may get around Rs 3,642 as a pension for their service period of 17 years.
What will be your monthly pension with 27 years of service?
(Pensionable Salary X Pensionable Service)/70 = (15,000×27)/70 = Rs 5,785.
Individuals may get Rs 5,785 as a pension if their service is 27 years.
What will be your monthly pension with 33 years of service?
(Pensionable Salary X Pensionable Service)/70 = (15,000×33)/70 = Rs 7,071.
Individuals may get around Rs 7,071 as a pension for their service of 33 years.
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