EPFO: Big news for EPFO members. A lot of private workers often find themselves asking how much pension they’ll get when they retire. Is it the same as what government workers receive? The pension you get from EPF and EPS is totally based on how many years you’ve worked and what your last salary was.
If you’ve been on the job for at least 10 years, then once you hit 58, you’ll start getting a monthly pension calculated using a specific formula. But if you leave before hitting that 10-year mark, you won’t get a monthly pension; instead, you’ll just get back the amount you deposited. This is why it’s important to transfer your EPF instead of withdrawing it when you switch jobs.
You need 10 years of service to qualify for a pension
According to EPS guidelines, you can only get a pension after working for at least 10 years. The retirement age is set at 58, but there’s an option for a lower pension starting at age 50. If you leave your job before reaching 10 years, you won’t receive a monthly pension. Instead, you’ll get the total amount you put into your EPS account when you retire.
So, how much pension can you expect after working for 30 years?
The EPS pension is calculated using a straightforward formula.
Pension = (Pensionable Salary × Years of Service) / 70
In this formula, pensionable salary refers to the average basic salary plus DA for the last 60 months. For instance, if we assume an employee’s pensionable salary is Rs 15,000 and they’ve worked continuously for 30 years, their monthly pension would be:
(15,000 × 30) / 70 = Rs 6,428 per month
This shows that the longer you work and the higher your final salary, the bigger your pension will be. If the employee passes away, their family will continue to receive the pension.
In the event of an employee’s death, their family is entitled to a family pension. This can go to the spouse, children, or orphans. To claim it, they need to submit Form 10D, or the Composite Claim Form, to the EPFO through the last employer. The family pension is granted based on this information.
Experts advise that when you change jobs, you shouldn’t withdraw your EPF funds but instead transfer them to the new employer. This allows you to reap the benefits of both your previous and new years, significantly increasing your retirement pension.
