EPFO Pension: If you’re working for a company, especially in the private sector, you probably know about the EPFO. This organization was set up by the central government to help employees financially, and it’s become a solid choice for safe returns these days.
Under the EPFO, employees put in 12% of their salary into their PF account, and part of that 12% goes into the EPS, or pension fund, which employees can access when they retire. Here’s some essential info about it. We’ll explain how much pension you can expect from your company after you retire and how much will be credited to your account.
The pension you get through EPFO is known as the EPS pension. To qualify, employees need to work for at least 10 years, and they start receiving their pension after turning 58. This amount is paid out monthly. Throughout your service, contributions are made to EPS, and the pension amount is based on these contributions. Out of the 12% you contribute to the PF, 8.33% goes into the Employees’ Pension Scheme, while 3.67% is allocated to the Employees’ Provident Fund.
What’s the pension formula?
First off, to be eligible for a pension, an employee must have a minimum of 10 years of service and keep contributing to the PF during that time. The EPFO has a calculator to help figure out the pension amount. The formula takes into account the pensionable salary and the required service time for the pension, which is at least 10 years. Now, about the pensionable salary: it’s the average of your salary over the last 60 months. The rest of the time counts as your contribution years.
EPFO Pension Calculator Formula
Monthly pension = (Pensionable pay × Pensionable service) / 70
Here’s what you can expect
If an employee has a pensionable salary of Rs 15,000 and has worked for 10 years, they will get a monthly pension of Rs 2,143 using this formula: Monthly pension (Rs 15,000 × 10) / 70 = Rs 2,143. This pension amount is calculated based on 10 years of service and a salary of Rs 15,000. The rest of the pension will depend on your salary and how long you’ve contributed.
