The Employee Pension Scheme (EPS) is a retirement plan in India that provides a pension to employees in the organized sector after their retirement, based on their contributions and years of service. It’s managed by the EPFO, in which both the employee and employer contribute to the Employees’ Provident Fund (EPF), with a portion of the employer’s contribution going towards the EPS. Thus, let’s find out what your monthly pension will be with Rs 35,000 as basic salary and 30 years of service.
Also read: EPS Pension Calculation: Rs 55,000 basic salary, 30 years of service, find out your monthly pension
What is Employees’ Pension Scheme?
EPS is a retirement plan for employees in the organised sector. Since EPS is sponsored by the Indian Government, the returns are guaranteed and there are no risks to invest in the scheme. Both employees and employers contribute 12% of the employee’s basic salary to the EPF, with 8.33% of the employer’s share going to the EPS.
Who is eligible for EPS?
To get a pension, you must:
- Be at least 50 years old (for early pension) or 58 years old (for regular pension)
- Be a member of the EPFO
- Have worked for at least 10 years
What is the contribution towards Employee Pension Scheme (EPS)?
The employer and employee contribute 12 per cent of the employee’s basic salary and DA towards the EPF scheme. The contribution of an employer to the EPS is 8.33 per cent of the employee’s basic pay and dearness allowance. The employer also contributes 3.67 per cent of the employee’s pay to the Employees’ Provident Fund (EPF).
What are benefits of Employee Pension Scheme (EPS)?
EPS provides a fixed income after retirement, starting at 58 years for regular retirement or 50 years for early retirement. You can also withdraw your entire pension amount at 58, even if you leave your job 10 years before that.
How to make EPS nomination?
Eps nomination is a process in which the account holder can choose a person or people 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.
What are the minimum and maximum pension amounts under Employee Pension Scheme (EPS)?
The minimum monthly pension amount that you will receive is Rs 1,000, and the maximum is Rs 7,500.
EPS Pension Calculation Formula
The formula for calculating the EPF pension is:
Monthly pension amount = (Pensionable Salary x Pensionable Service) / 70.
EPS Pension Calculation
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 35,000, their EPS pension will be calculated at Rs 15,000 salary. Individuals may get about Rs 6,429 as a pension if the service is 30 years. (Pensionable Salary X Pensionable Service)/70 = (15,000×23)/70 = Rs 6,429.
(Disclaimer: Our calculations are projections and not investment advice. Do you own due diligence or consult an expert for financial planning)
