Early Pension: Every employee has to think about life after retirement. Government employees have the benefit of a pension, but what about non-government employees? They can invest in EPFO. Normally it is said that 60 is the age of retirement. But expectations are there. Some chose to retire earlier. If someone retires early, is he eligible to invest in EPFO?
Private employers contribute to EPFO to guarantee post-retirement income for their employees. After putting money into EPFO, you receive a one-time payment and regular pension when the investment matures. EPFO users wonder about the amount of pension they will receive post-retirement. Another query is, at what age is it appropriate to retire?
You can avail the pension benefits in EPFO
You can avail the pension benefits in EPFO after contributing to EPFO for a continuous period of 10 years. Simultaneously, one must have worked for 35 years to be eligible for retirement benefits. Formula to determine pension amount is (Average salary x Pensionable Service / Pensionable Service) 70). For instance, when your starting salary is Rs 15,000 and you have a 35-year employment duration, you can compute your pension by using the given formula. The formula calculates a monthly pension of 7,500 rupees, which will be available by multiplying 15,000 by 35 and dividing the result by 70. By using this equation, you can determine the amount of pension.
Know the calculation
The option of early pension can be selected at the age of 50 years. However, it is cut by 4 percent every year. For example, if you select the option of early pension at the age of 56, then you will get 92% of the basic amount as pension after deducting 4%. The EPFO has to deposit 12% of the basic salary every month. It is contributed by the employee as well as the company. Interest is paid by the government on deposits in the EPFO fund. In this fund, 75 percent of the amount deposited in this fund is received as a lump sum after retirement and 25 percent is received every month as a pension.