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EPS Pension: EPFO Provides Big Relief to Applicants Seeking Higher Pension, Releases Pension Calculation Method

EPS Pension: The deadline for EPS members to apply for a higher pension is now extended until June 26, 2023. However, there has been confusion among EPS members regarding the calculation of the higher pension amount. To address this issue, EPFO has provided clarification on the method of calculating the higher pension.

EPFO has issued a circular stating that the calculation of higher pension for employees opting for it will be based on their actual salary under EPS. The circular further explains that the formula for calculating the higher pension will vary depending on whether the employee retires before or after September 1, 2014.

Pension Calculation for Those Retiring before September 1, 2014:

If an eligible applicant’s pension (EPS) started before September 1, 2014, the higher pension amount will be calculated based on the average monthly salary received during the 12 months preceding the date of retirement.

Pension Calculation for Those Retiring on or after September 1, 2014:

For those retiring on or after September 1, 2014, the higher pension will be calculated considering the average pay drawn during the 60 months preceding the date of retirement, which is the contribution period of service.

Why is September 1, 2014 Important?

The government revised the pension calculation formula in September 2014. Before this date, the average salary during the 12 months preceding the retirement date was considered. However, from September 1, 2014, the government changed it to the average salary during the 60 months preceding the retirement date. As a result, the pension of those who retired on or after September 1, 2014, was reduced.

Understanding Pension Calculation with an Example:

  • Let’s say you joined the EPS scheme in October 2008 and your retirement is in September 2033, making your service period 25 years (October 2008 – September 2033). The average salary for pension calculation will be based on your average salary for the last 5 years (60 months).
  • If you retired on or before August 31, 2014, the average salary for higher EPS pension would be calculated based on the average salary of your last year of service.
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