If you are a salaried person and contribute to EPFO ​​(Employees Provident Fund Organization) every month, then this news is very important for you. Employee Pension Scheme (EPS), also known as a pension scheme in common language, becomes a support for your old age after retirement. Every employee should know the maximum pension they can get under this scheme. Let us understand the complete calculation of pension from EPFO ​​and the rules related to it in easy language.

Conditions and eligibility to get a pension

Not everyone gets a pension from EPFO. There is a main condition to get a pension: you have to contribute to this scheme for at least 10 years. It is decided on the basis of your total job period and contribution, how much pension you will get.

Easy formula to calculate pension

The pension received from EPFO ​​is calculated using a special formula:

EPS=(Average Salary×Pensionable Service)/70

Here, Average Salary means your Basic Salary + DA of the last 12 months. The maximum limit of pensionable service is 35 years. Similarly, the maximum pensionable salary is ₹15,000. Hence, the maximum pension share per month is ₹15,000 x 8.33% = ₹1,250. As per this formula, if a person completes the maximum contribution and 35 years of service, they can get a maximum pension of ₹7,500.

Minimum and Maximum Pension

The minimum pension under EPS is ₹1,000. The maximum pension can be up to ₹7,500. Given today’s inflation, the minimum pension of ₹ 1,000 is considered insufficient to meet basic needs. For this reason, there has been a long-standing demand to increase it.

Some more important rules related to pensions

According to EPS rules, the employee is entitled to a pension at the age of 58. However, if he wants, he can take a pension even before 58. This is called Early Pension, which can be availed after the age of 50. But in this option, the number of years before the age of 58, your pension amount will be reduced by 4 percent every year.

How much of your earnings go to EPS

12% of Basic Salary + DA of employees working in the organized sector is deposited in EPF every month. The company also deposits the same amount. However, the company’s 12% contribution is split into two parts: 8.33% goes directly to the EPS fund, and the remaining 3.67% is deposited into the EPF account. This 8.33% contribution forms the basis of your pension.