EPF Pension: How is the pension amount calculated for pensioner? Check the formula

The Employee Pension Scheme (EPS) plays a crucial role in ensuring employees' financial stability in their retirement years by providing them with lifelong pension benefits and social security. Introduced on November 16, 1995, the EPS replaced the Employees' Family Pension Scheme of 1971. Managed by the Employees' Provident Fund Organisation (EPFO), the EPS 1995 includes provisions for granting pensions to EPF contributors and offering benefits to their family members and nominees.

An individual employed by the central government who retires according to the Pension Rules is eligible to receive a pension after meeting the minimum requirement of ten years of service. Employees in the organised sector covered under the Employees' Pension Scheme can avail of a pension upon reaching the retirement age of 58.

How to know your pension amount

Pension = (Pensionable Salary (average of last 60 months) X Pensionable Service)/70.

What is the tenure considered for EPS 1995

When a member enrolls in the Employees' Pension Scheme 1995 at 23 years old and retires at 58, contributing to the current wage ceiling of Rs. 15,000, they can anticipate receiving around Rs. 7,500 as their pension if they have completed 35 years of service.

This calculation is determined by using the formula: (Pensionable Salary X Pensionable Service)/70 = (15,000 x 35)/70 = Rs 7,500.

Eligibility for EPF pension

In order to qualify for pension benefits, EPF subscribers must have served for at least 10 years and retire after reaching the age of 58. Alternatively, subscribers who are 58 years old are also eligible for pension even if they have not retired yet. Additionally, EPF subscribers who are 50 years old and have already served for more than 10 years are also eligible to receive pension benefits.

The average salary is determined only for giving the pension to member. It is the average of last 60 months. (Non-contributory period, if any, is reduced).

A member becomes eligible for pension upon reaching the age of 58. If a member resigns from employment between the ages of 50 and 57, they have the option to receive an early (reduced) pension.

Death of EPFO Member

Upon the demise of the EPFO member, the Pension will be automatically disbursed to the spouse (Widow/Widower). Furthermore, the children are entitled to receive benefits until they reach the age of 25, with a maximum of 2 children at a time. If there is a disabled child in the family, they will receive disabled pension for life in addition to the two child pensions.

Pension Contribution

The failure of an employer to make pension contributions will not impact the issuance of the Pension benefit, as it is guaranteed.