If you’re concerned about managing pension costs after retirement and wondering how to get by at 60, this information is for you. Did you know that if you’ve worked for a company for at least 10 years, you can receive a pension from them once you retire? We’re referring to the EPS pension provided by EPFO, which guarantees a fixed monthly pension. Let’s dive into the details of this scheme, including when you can start receiving your pension, how much it will be, and the eligibility criteria.
Employee Pension Scheme (EPS)
The Employees’ Pension Scheme was introduced by EPFO on November 16, 1995, with the aim of offering a monthly pension to employees in the organized sector. The pension amount is determined based on the number of days the employee has worked. So, if you’ve been employed for 10 years and have contributed to your PF, let’s explore how much you can expect to receive each month.
Eligibility for EPS
To qualify for the Employee Pension Scheme (EPS), you must have worked in the organized sector. Under this scheme, you are entitled to a minimum monthly pension of Rs 1,000. However, there has been a long-standing demand to increase this minimum amount to Rs 7,500 per month. Additionally, benefits from this scheme are available only after you turn 58, and it’s crucial that you have a PF account where you’ve made contributions during your employment.
EPF members contribute 12% of their basic salary to the Provident Fund via EPFO, and the employer matches this contribution. The employer’s contribution is split into two segments: 8.33% is allocated to the Employee Pension Scheme (EPS), while 3.67% goes to the Provident Fund (PF).
Here’s how your pension is calculated:
Under the EPS, the pension amount is determined based on the duration of employment and the salary earned. For instance, let’s calculate the pension for an employee who has worked for 10 years with a monthly salary of Rs 15,000.
Monthly Pension = (Pensionable Salary X Pensionable Service) / 70
Pensionable Salary = Average of the last 60 months’ salary
Using this formula, we can illustrate with an example. If you have been employed for 10 years and your pensionable salary is Rs 15,000, your monthly pension would be Rs 2,143, which you can start receiving at the age of 58.
