EPS Pension Estimates: How you can get maximum Rs 7,500/month EPS pension after your service

11 hours ago 1

EPS Pension Calculations: The Employer Provident Fund (EPF) account of a private sector employee comprises their EPF account and the Employees' Pension Scheme (EPS) account. While they get EPF in the form of a retirement corpus at withdrawal, the EPS amount provides a monthly pension at retirement or prior to it when the employee opts for it. The pension is calculated at the last-drawn pensionable salary and the number of service years. The maximum monthly pension allowed is Rs 7,500. But how an EPF account holder may get it. Read to know-

What is EPS Pension Scheme?

The government introduced this retirement benefit pension scheme in 1995 for EPF account holders.

The retirement pension amount depends on the salary and the number of service years.

The EPF account holder doesn't need to contribute separately to their EPS account.

The amount is deducted from their EPF contribution.

They can start getting pension at 58 years of age, which is also the EPF retirement age.

If they want, they may opt for an early pension at a reduced rate or may delay it by a maximum of 2 years to get a higher amount.

EPS contribution

The maximum EPF contribution allowed for an EPF account holder is 12 per cent of their basic pay and dearness allowance (DA).

The employer also contributes an equal amount.

But only 3.67 per cent of their amount goes to the employee's EPF account; the rest, 8.33 percent, goes to the EPS account.

But there is a catch!

The employer contribution to the employee's EPS account is 8.33 per cent, but the maximum EPS contribution allowed in a month is Rs 1,250, which is equal to Rs 15,000 a year.

It means the maximum pensionable salary to calculate the pension is Rs 15,000.

At the same time, the minimum EPS pension amount is Rs 1,000.

While the employee gets a fixed interest on their and the employer's EPF contribution, they get no interest on the employer's EPS contribution.

Then what happens to the rest of the EPS contribution?

The amount over and above Rs 1,250 transfers to the employee's employer EPF contribution.

E.g., if 8.33 per cent of a person's basic salary and DA is Rs 5,000, only Rs 1,250 will go to the employee's EPS account; the remaining Rs 3,750 goes to the employee's EPF account, on which they get the interest as per prevailing rates.