The Employee Pension Scheme (EPS) is a retirement plan managed by the EPFO that provides a monthly pension to employees after they turn 58. You can also opt for an early pension at the age of 50. Under this scheme, both employees and employers contribute to the Employees’ Provident Fund (EPF), with a portion of the employer’s contribution allocated to the EPS. Let’s calculate the monthly pension for someone with a basic salary of Rs 47,000 and varying years of service, which are 16, 22, and 30 years, to see how much they can expect to receive each month.
What are minimum and maximum EPS amounts?
The minimum monthly pension that you will receive is Rs 1,000, and the maximum is Rs 7,500.
Who is eligible for Employee Pension Scheme (EPS)?
Those who have attained the age of 50 years for early pension and 58 years for regular pension.
You must be a member of the EPFO.
You must have completed 10 years of service.
How do EPS contributions work?
When it comes to saving for retirement, both you and your employer contribute to it. Here’s how it works: You and your employer each put 12 per cent of your basic salary into a fund.
Your employer’s 12 per cent is split into two parts: 8.33 per cent goes into the Employee Pension Scheme (EPS) and 3.67 per cent goes into the Employees’ Provident Fund (EPF).
EPS calculation conditions
The formula for calculating the EPS pension is:
Monthly pension amount = (Pensionable Salary x Pensionable Service) / 70.
Monthly Pension Calculation: Pensionable service, 15, 28, & 32 years
The monthly pension amount you will receive will depend on your pensionable salary and service. The average salary used in the formula is the average of your basic salary plus your DA for the last 12 months.
Pension Calculation
Contribution to the (present) wage ceiling of Rs 15,000. Even if someone’s basic salary and dearness allowance is Rs 47,000, their EPS pension will be calculated at Rs 15,000 salary.
What will be your monthly pension with 16 years of service?
(Pensionable Salary X Pensionable Service)/70 = (15,000×16)/70 = Rs 3,429.
Individuals may get around Rs 3,429 as a pension for their service period of 16 years.
What will be your monthly pension with 22 years of service?
(Pensionable Salary X Pensionable Service)/70 = (15,000×22)/70 = Rs 4,714.
Individuals may get Rs 4,714 as a pension if the service is 22 years.
What will be your monthly pension with 30 years of service?
(Pensionable Salary X Pensionable Service)/70 = (15,000×30)/70 = Rs 6,429.
Individuals may get around Rs 6,429 as a pension for their service of 30 years.
Also Read: Rs 14,000 SIP vs Rs 10,000 Step-up SIP: Which can generate a higher corpus in 10,20 & 30 years?
