Employee Pension Scheme: Pensions on disability, widow pensions, and pensions for nominees are all provided under the Employee Pension Scheme (EPS) of 1995. The Family Pension Scheme was superseded by the Employee Pension Scheme (FPS). It is paid for by withdrawing 8.33% of the employer’s monthly EPF payment, which is limited to 8.33% of Rs. 6500 or 541. As of September 1, 2014, the salary cap was increased to Rs 15,000 (or Rs 1250 per month) and the government now contributes 1.17 percent of employee pay each month.
Employee Pension Scheme
The scheme’s main goal is to
- 1) offer a superannuation pension to members who have 20 years of qualifying service and retire at age 58.
- 2) Retiring Pension: A member who has 20 years of qualifying service and retires or otherwise leaves their job before becoming 58 years old is entitled to this pension.
- 3) Pension for Total Permanent Disability
- 4) Short service pension: Member must provide service that is at least 10 years but not more than 20 years in length.
Q. When may an employee begin to get a pension?
A: A employee cannot begin earning an EPS pension unless they have completed at least 10 years of service and are 58 or 50 years old.
No pension is, however, due until the age of 50, and early pension received after the age of 50 but before the age of 58 is subject to a discounting factor of 4% (from September 26, 2008) for each year that falls short of 58. The limits mentioned above do not apply in the event of death or disability.
How long will the pension be offered?
A: The member is eligible for a lifetime pension, and his family members are also eligible for a pension in the event of his passing.
What calculation method is used to determine the monthly pension?
A: According to the Employee Pension Scheme, the monthly retirement pension is calculated using the formulas for “Pensionable Service” and “Pensionable Salary.”
(Pensionable Salary*Pensionable Service)/70 equals the monthly pension.
The average contributing wage for the last 12 months prior to the date of withdrawal from the plan is taken into account to determine the pensionable salary; generally, this amount is restricted to Rs. 6,500 per month, unless the employer makes specified extra contributions with authorization. The maximum number of years that a member may have pensionable service for which they have received contributions is 35.
What is the highest pension amount that may be obtained through EPS?
A: The government also set the monthly pension payment at Rs. 1,000 starting in the 2014–15 fiscal year. People who began working after September 1, 2014, and make more than 15,000 rupees in basic pay and DA are not required to pay into the pension plan. Prior to September 1, 2014, the highest pension under the pension formula would have been equal to 6500 times 35 divided by 70, which would be Rs 3,250 a month or Rs 39,000 (3250 times 12) every year. It is thoroughly explained in our post, How much EPS Pension will you get using the EPS Pension Calculator?
If paid under EPS, is the monthly pension just?
Pension payments are pitiful in size. A 35-year repeating deposit at an interest rate of 8% would return 12,492,263 times the original investment of Rs 541. One would receive a monthly pension of Rs 10,150, which is significantly more than Rs 3250, if this maturity amount was used to purchase a pension plan, such as LIC’s Jeevan Akshay VI. To do this, enter the above amount, Rs 12,49,263 in the premium calculator of LIC with the option as Annuity payable for life.
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