PF – How much pension will you receive from PF upon retirement? Know here

PF Money– Approximately 70 million people in the country are members of the Employee Provident Fund (EPF). Consequently, many employees have a question: how much pension they will receive upon retirement? The Employee Pension Scheme (EPS) forms a major component of the Public Provident Fund (EPF).

It guarantees employees a regular pension after retirement. The pension amount in the EPS is based on specific calculations. It does not depend on the total amount contributed. Therefore, it is crucial to understand how retirement pension is determined. Let’s explore this in detail.

How is PF pension decided?

In the Employees’ Provident Fund Organization ‘s (EPFO) EPS scheme, 8.33% of the 12% contribution by the employer is transferred. However, this amount does not directly depend on the employee’s entire basic salary. In fact, since September 2014, a limit has been imposed on EPS contributions. Under this limit, a maximum of Rs 1,250 per month can be deposited in the EPS account. If the employer’s contribution exceeds this amount, the remaining amount goes into the EPF account. Pension is determined based on this limited contribution.

These employees will not get the benefit of EPS

It should be noted that the Employee Pension Scheme (EPS) is not available to all employees. If you registered with the Employees’ Provident Fund (EPF) after September 2014 and your basic salary is more than ₹15,000 per month, you will not receive this benefit. For such employees, the entire employer contribution is transferred directly to their EPF account. This means that those starting new jobs and those with high salaries will not receive the benefits of EPS.

What is the maximum pension that can be received?

It’s worth noting that the maximum monthly pension under EPS is Rs 75,000, while the minimum pension amount is Rs 1,000. The Employee Pension Scheme is calculated based on the employee’s tenure and average monthly salary. However, higher contributions don’t significantly increase the pension. This is due to the government’s monthly limit of Rs 1,250.