EPS Pension Calculation: Rs 45,000 basic salary, 30 years of service, find out your monthly pension
The Employee Pension Scheme (EPS) is a retirement plan that provides a monthly pension to employees after they turn 58. Both the employee and employer contribute 12 per cent of the basic salary to the Employees' Provident Fund (EPF), with 8.33 per cent of the employer's share allocated to the EPS, which accumulates over time to determine the retirement pension.
The Employee Pension Scheme (EPS) is a government-backed retirement plan designed to secure the financial future of India's workforce. Introduced in 1995, it guarantees a steady pension for employees in organized sectors after retirement. To find out its benefits, let's calculate the monthly pension for an individual with a basic salary of Rs 45,000 and 30 years of service, providing a clearer picture of the scheme's advantages.
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(Disclaimer: Our calculations are projections and not investment advice. Do you own due diligence or consult an expert for financial planning)
Employee Pension Scheme (EPS)
As an EPF member, you're automatically enrolled in the Employee Pension Scheme (EPS), a government-backed retirement plan designed for organised sector workers. This means your retirement savings are not only secure but also guaranteed. Here's how it works: both you and your employer contribute 12 per cent of your basic salary to a fund, with a portion of that allocation going towards EPS, providing a safety net for your golden years.
Eligibility criteria for EPS?
To be eligible for the Employee Pension Scheme (EPS), you must meet certain criteria. Firstly, you should have attained the age of 50 for an early pension or 58 for a regular pension. Additionally, you must be a registered member of the Employees' Provident Fund Organisation (EPFO) and have completed a minimum of 10 years of service.
How does Employee Pension Scheme (EPS) contribution work?
When it comes to building your retirement corpus, you're not alone - your employer contributes to it too. Here's the breakdown: both you and your employer contribute 12 per cent of your basic salary to a fund. However, your employer's 12 per cent contribution is divided into two parts: 8.33 per cent goes to the Employee Pension Scheme (EPS) to secure your pension, while 3.67 per cent goes into the Employees' Provident Fund (EPF) to build your provident fund.
Benefits of EPS?
The Employee Pension Scheme (EPS) provides fixed income after retirement, with two possible scenarios: you can receive a pension at the age of 58 or opt for early retirement at 50. Additionally, if you leave service 10 years before turning 58, you have the option to withdraw the entire pension amount at the age of 58, providing a lump-sum benefit.
EPS nomination
Eps nomination is a method in which the account holder can choose a person to receive the pension benefits from EPS. Nominees can be family members, such as a spouse, children, or dependent parents. If the member has no family, they can nominate anyone.
Under the Employee Pension Scheme, are employees the only beneficiary of the fund?
The benefit of the EPS is paid to the employee or the family of the employee, in his or her absence.
What is minimum and maximum EPS amount?
The minimum monthly pension that you will receive is Rs 1,000, and the maximum is Rs 7,500.
EPS calculation conditions
The formula for calculating the EPS pension is:
Monthly pension amount = (Pensionable Salary x Pensionable Service) / 70.
Monthly Pension Calculation: If your current age is 28, and pensionable service is 30 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.
What will be your monthly pension?
Contributing to the (present) wage ceiling of Rs 15,000. Even if someone's basic salary and dearness allowance is Rs 45,000, their EPS pension will be calculated at Rs 15,000 salary. Individuals may get about Rs 6,429 as a pension if the service is 30 years. (Pensionable Salary X Pensionable Service)/70 = (15,000x30)/70 = Rs 6,429.