The Employee Pension Scheme (EPS) is a government-backed retirement plan that helps workers in India save for their future. Launched in 1995, it ensures that employees who work in organized sectors get a steady pension after they retire. Thus, let’s find out what will be your monthly pension with 45,000 as a basic salary and 30 years of service.
What is Employee Pension Scheme (EPS)?
The Employee Pension Scheme (EPS) is a retirement plan for people working in organized sectors. If you’re an EPF member, you’re automatically part of EPS. The good news is that it’s backed by the government, so your money is safe and guaranteed. Here’s how it works: you and your employer both put 12 per cent of your basic salary into a fund, and a part of that goes into EPS.
What are eligibility criteria for EPS?
- You must have attained the age of 50 years for early pension and 58 for regular pension.
- You must be a member of the EPFO.
- You must have completed 10 years of service.
How does Employee Pension Scheme (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).
What are benefits of EPS?
Employee Pension Scheme provides fixed income after retirement at the age of 58 years or after early retirement at 50 years.
It allows withdrawal of the complete pension sum at the age of 58 years if the member leaves service 10 years before 58 years.
EPS nomination
Eps nomination is a method in which the account holder can choose a person to receive the pension benefits from EPS. Nominees can be family members, such as a spouse, children, or dependent parents. If the member has no family, they can nominate anyone.
Under the Employee Pension Scheme, are employees the only beneficiary of the fund?
The benefit of the EPS is paid to the employee or the family of the employee, in his or her absence.
What is minimum and maximum EPS amount?
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: If your current age is 28, and pensionable service is 30 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.
What will be your monthly pension?
Contributing to the (present) wage ceiling of Rs 15,000. Even if someone’s basic salary and dearness allowance is Rs 45,000, their EPS pension will be calculated at Rs 15,000 salary. Individuals may get about Rs 4,930 as a pension if the service is 30 years. (Pensionable Salary X Pensionable Service)/70 = (15,000×30)/70 = Rs 6,429.
(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
