The Employees’ Provident Fund Organisation (EPFO) runs the Employees’ Pension Scheme (EPS) to provide financial security to employees after retirement. It is necessary to work for at least 10 years to get pension benefits. However, individuals have to complete the age of 50 or 58 years old to withdraw the pension amount.
If a person withdraws a pension at the age of 50, they get a lesser amount of EPS. The benefit of EPS is available to the employee and, in his absence, to his family. So, if you are also a member of EPFO and want to know how much EPS pension you will get after 18, 25, and 35 years of service on a basic salary of ₹ 50,000, then this article is for you.
A pension will be available every month after retirement
The Employees’ Pension Scheme (EPS) provides monthly pension to employees after completing the age of 58 years. Employees can also opt for early retirement at the age of 50 and still get the benefits. This scheme is a great support for employees who want regular income after their retirement.
How much of your salary goes to EPS
Both the employer and the employee contribute 12-12 percent of the employee’s salary to EPF. However, the entire share of the employee goes to EPF, while 8.33 percent of the employer’s share goes to the Employees’ Pension Scheme (EPS) and 3.67 percent goes to EPF contribution every month. In this way, a fixed amount keeps accumulating every month for your pension.
Who is eligible for the Employees’ Pension Scheme
- Must be 50 years of age for early pension and 58 years of age for regular pension.
- You must be a member of EPFO.
- You must have completed at least 10 years of service.
- If you fulfill these conditions, then you are entitled to get a pension under EPS.
Benefits of Employee Pension Scheme
Who will get pension benefits after you in EPS
An EPS nomination allows you to choose who will receive your pension benefits if something happens to you. You can nominate family members like your spouse, children, or parents. If you don’t have a family, you can choose anyon. This ensures that your loved ones continue to get financial support even in your absence.
What is the minimum and maximum EPS amount
The minimum monthly pension you will get is ₹1,000, and the maximum is ₹7,500. The actual amount of your pension will depend on your job tenure and pensionable salary.
Know how your monthly pension is calculated
The formula for calculating EPS pension is:
Monthly pension amount = (Pensionable salary × Pensionable service) / 70
Pensionable salary and pensionable service will decide the amount of your monthly pension. The average salary used in the formula is the average of your last 12 months’ basic salary and dearness allowance (DA).
Pension calculation
The salary limit is currently ₹15,000. Even if someone’s basic salary and dearness allowance are ₹50,000, their EPS pension will be calculated on a salary of ₹15,000. This is an important point that you should keep in mind while estimating your pension.
How much monthly pension will be received for 18 years of service
(Pensionable Salary × Pensionable Service) / 70 = (₹15,000 × 18) / 70 = ₹3,857
For a service period of 18 years, individuals can get around ₹3,857 as a pension.
How much monthly pension will be received for 25 years of service
(Pensionable Salary × Pensionable Service) / 70 = (₹15,000 × 25) / 70 = ₹5,357
If the service is 25 years, then individuals can get ₹5,357 as a pension.
How much monthly pension will be received after 35 years of service
(Pensionable salary × pensionable service) / 70 = (₹15,000 × 35) / 70 = ₹7,500
For a service period of 35 years, individuals can get around ₹7,500 as a pension. This is the maximum pension amount available under EPS.