The monthly pension for an employee is determined by their service period, which is taken up to the next year if their service period is six months or more. For instance, a service period of 10 years 7 months would be taken as 11 years. Taking an employee drawing a basic salary of Rs 68,000 and having different service periods of 16 years, 26 years, or 32 years, as an example. The amount of pension would be computed on these years of service and the basic pay. To calculate the pension amount, let’s use the formula presented below.
Who is eligible for Employee Pension Scheme (EPS)?
- Those who have attained the age of 50 years for early pension and 58 years for regular pension.
- You must be a member of the EPFO.
- You must have completed 10 years of service.
How does EPS contribution work?
When it comes to saving for retirement, both you and your employer contribute to it. Here’s how it works: You and your employer each put 12 per cent of your basic salary into a fund.
Your employer’s 12 per cent is split into two parts: 8.33 per cent goes into the Employee Pension Scheme (EPS) and 3.67 per cent goes into the Employees’ Provident Fund (EPF).
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, 16, 26, & 32 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 is Rs 68,000, their EPS pension will be calculated at Rs 15,000 salary.
What will be your monthly pension with 16 years of service?
(Pensionable Salary X Pensionable Service)/70 = (15,000×16)/70 = Rs 3,428.
Individuals may get around Rs 3,428 as a pension for their service period of 16 years.
What will be your monthly pension with 26 years of service?
(Pensionable Salary X Pensionable Service)/70 = (15,000×26)/70 = Rs 5,571.
Individuals may get Rs 5,571 as a pension if the service is 26 years.
What will be your monthly pension with 32 years of service?
(Pensionable Salary X Pensionable Service)/70 = (15,000×32)/70 = Rs 6,857.
Individuals may get around Rs 6,857 as a pension for their service of 32 years.
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