EPFO Pension Calculation: The Employee Provident Fund Organization (EPFO) administers the Employee Pension Scheme, which serves to enhance the welfare of employees and stands as one of the most extensive social security initiatives in India. This scheme provides employees with a monthly pension determined by their length of service and salary.
The EPS was inaugurated on November 16, 1995, with the primary aim of ensuring a steady income for employees in the organized sector post-retirement. To qualify for the EPS pension, certain eligibility criteria must be met. Specifically, an employee must have a minimum of 10 years of service. Additionally, benefits from this scheme are accessible only after the individual reaches the age of 58. It is also required that the employee be a registered member of the EPFO and have consistently contributed to the EPS throughout their employment.
Minimum requirement
The minimum service requirement to qualify for a pension is 10 years. Therefore, if you are a member of the EPF and have completed 10 years of service, you are eligible for a pension under this scheme.
The minimum monthly pension is set at Rs 1,000, while the maximum monthly pension is capped at Rs 7,500.
Understand the calculation
EPF members contribute 12% of their basic salary to the Provident Fund each month, with the employer matching this contribution. The employer’s contribution is allocated into two segments: 8.33% is directed towards the employee’s pension scheme, and 3.67% is allocated to the employee’s Provident Fund.
The formula for calculating the EPS pension is as follows:
Monthly pension = (Pensionable salary × Pensionable service) / 70
Where Pensionable salary is the average of the last 60 months’ salary, and Pensionable service refers to the number of years the employee has contributed to the EPS during their employment.