PF means Provident Fund, also called the people’s future security fund. Every month, a part of the amount deposited in an employee’s name in EPFO goes to the Employees’ Pension Scheme (EPS). Nowadays, people often change jobs. After working in a company for 10 to 12 years, they leave the job. Then a question arises — what happens to the money deposited in the pension fund during those 10 to 12 years? Will they get that pension at all?
The rules which was introduced by the Employees’ Provident Fund Organisation (EPFO), are very clear. As per the rules, you must work for at least 10 years to be eligible for a monthly pension. If your total work period (in one or more companies) is less than 10 years, you will not get a monthly pension. But if it is more than 10 years, you will be eligible.
Suppose someone worked for 11 years and then left their job. Just After this, they will not get the pension immediately after leaving. It means they have earned the right to get a pension after 58 years of age. Even if you quit at 40, you will get the pension only after turning 58.
How Your Money Is Divided
An employee contributes 12% of their salary to the EPF fund. The employer also gives the same amount. Out of this, 8.33% goes to the Employees’ Pension Scheme (EPS), and 3.67% goes to your main EPF account. The money in EPS (8.33%) is saved for your pension after retirement.
How Much Pension Will You Get?
EPFO follows a formula to calculate your monthly pension:
Monthly Pension = (Pensionable Salary × Pensionable Service Years) / 70
Somebody’s pensionable service years are the total years for which contributions were deposited in their EPS account. The pensionable salary is your average salary for the last 60 months (5 years) of service, with a current limit of ₹15,000 per month.
Example:
If somebody worked for 10 years and their pensionable salary is ₹15,000 —
(15,000 × 10) / 70 = ₹2,143 per month (approx) will be their monthly pension.
If someone worked for 25 years —
(15,000 × 25) / 70 = ₹5,357 per month (approx) will be their monthly pension.
