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How Epfo Pension Is Calculated?
The Employees’ Pension Scheme (EPS) is a retirement benefit scheme run by the Employees’ Provident Fund Organisation (EPFO) for Indian workers in the private sector. The pension is calculated based on the following factors:
- Pensionable salary: The average monthly salary of the last 12 months of service, capped at Rs.15,000.
- Pensionable service: The number of years of service in the organized sector after 15th November 1995.
- Date of commencement of pension: The date on which the pension becomes payable.
The Epfo pension is calculated using the following formula:
Monthly pension amount = (Pensionable salary * Pensionable service)/70
For example, if an employee has a pensionable salary of Rs.10,000 and a pensionable service of 20 years, then the monthly pension amount will be Rs.2,857.14 (10,000 * 20)/70).
The amount of pension is also subject to a minimum and maximum limit. The minimum pension is Rs.100 per month and the maximum pension is Rs.1,500 per month.
In addition to the basic pension, there are also additional benefits available under the EPS, such as dearness relief (DR) and a family pension. The DR is payable to pensioners to compensate for the increase in the cost of living. The family pension is payable to the spouse and eligible dependents of a deceased pensioner.
To be eligible for an EPS pension, an employee must:
- Be a member of the EPFO.
- Have completed at least 10 years of service in the organized sector after 15th November 1995.
- Have attained the age of 58 years.
The EPS is a valuable retirement benefit for Indian workers in the private sector. It provides a steady source of income after retirement and helps to ensure a comfortable standard of living.
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Here are some additional things to keep in mind about the EPFO pension calculation:
- The pensionable salary is the average of the basic salary and dearness allowance drawn in the last 12 months of service.
- The pensionable service is the total number of years of service in the organized sector, including the period before 15th November, 1995, up to a maximum of 35 years.
- The date of commencement of pension is the date on which the employee becomes eligible to receive the pension. This is usually the date on which the employee attains the age of 58 years.
- The pension is payable in arrears from the date of commencement of pension.
- The pension is subject to income tax.
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