EPFO update: How much will your pension increase after the SC verdict
EPFO update: On April 1, the Supreme Court ruled that the EPFO has to give pension to all retiring employees on the basis of their full salary rather than capping the figure on which contribution is calculated at a maximum of Rs 15,000 per month
- Apr 5, 2019,
- Updated Apr 5, 2019 6:05 PM IST
Private sector employees will see their pension shoot up under Employees Pension Scheme (EPS), 1995, thanks to a recent Supreme Court ruling. On April 1, the top court dismissed a special leave petition filed by Employees Provident Fund Organisation (EPFO) against a 2018 Kerala High Court order that had asked the retirement fund body to give pension to all retiring employees on the basis of their full salary, rather than capping the figure on which contribution is calculated at a maximum of Rs 15,000 per month.
But while this is great news in terms of building a nest egg, EPF subscribers will have to forego a significant chunk of their provident fund balance if they choose to opt for higher pension, The Economic Times reported. Here's the math to help you understand:
All employees in the organised sector currently contribute 12% of their salary (basic salary+dearness allowance) to the EPF. The employer makes a matching contribution, of which 8.33% goes to the EPS, till now subject to a salary cap of Rs 15,000. The scheme gives monthly pension based on the number of years put in by the employee multiplied by his last drawn salary and the total gets divided by 70.
Private sector employees will see their pension shoot up under Employees Pension Scheme (EPS), 1995, thanks to a recent Supreme Court ruling. On April 1, the top court dismissed a special leave petition filed by Employees Provident Fund Organisation (EPFO) against a 2018 Kerala High Court order that had asked the retirement fund body to give pension to all retiring employees on the basis of their full salary, rather than capping the figure on which contribution is calculated at a maximum of Rs 15,000 per month.
But while this is great news in terms of building a nest egg, EPF subscribers will have to forego a significant chunk of their provident fund balance if they choose to opt for higher pension, The Economic Times reported. Here's the math to help you understand:
All employees in the organised sector currently contribute 12% of their salary (basic salary+dearness allowance) to the EPF. The employer makes a matching contribution, of which 8.33% goes to the EPS, till now subject to a salary cap of Rs 15,000. The scheme gives monthly pension based on the number of years put in by the employee multiplied by his last drawn salary and the total gets divided by 70.