How much PF pension will you get on retirement? If you understand mathematics then there will be no doubt:

News India Live, Digital Desk: EPS Eligibility: It is very important for every employee to know how much pension you will get from Provident Fund (PF) after retirement, especially the one who has deposited his hard-earned money in EPFO. It does not depend only on the amount you have deposited, but it has a special calculation system which can be understood under the Employee Pension Scheme (EPS). Come, let us know how much pension you can get after retirement and how it is calculated.

What is Employee Pension Scheme (EPS)?
Employees Pension Scheme (EPS) is a very important social security scheme run by EPFO. Its objective is to provide financial security to employees working in the organized sector by giving them a regular monthly income after retirement. While you contribute 12% of your basic salary and dearness allowance to the Employees’ Provident Fund (EPF) and the employer also contributes the same amount, out of this 12% contribution of the employer, 8.33% is deposited in the EPS account. The remaining 3.67% goes to the employer’s EPF account.

Who is eligible to receive pension?
To get pension under EPS, you have to fulfill certain conditions:

• You must be an active member of EPFO.
• Must have completed at least 10 years of service, even if it is not continuous.
• You must be 58 years of age (superannuation pension).
• You can start taking pension even after the age of 50, but it will be deducted by 4% every year.
• If you start pension after 58 years (maximum up to 60 years), you get 4% more pension for every additional year.

How is pension calculated?
The monthly pension received under EPS is calculated using a simple formula:

Monthly Pension = (Pensionable Salary × Pensionable Service Period) / 70

Let us understand these terms:

• Pensionable Salary: It is based on the average monthly salary (Basic Salary + Dearness Allowance) for the 60 months (5 years) immediately preceding retirement. However, one important thing is that the maximum limit of pensionable salary has been capped at ₹ 15,000 per month (if you have not opted for ‘Higher Pension’). This means that no matter how high your salary is, in most cases the pension is calculated on a salary of ₹ 15,000 only.
• Pensionable Service Period: This is the total number of years of your employment when you have contributed to the EPS account. It is rounded off in years. If your service period is more than 20 years, you also get a bonus of 2 years.

Understand with example:
If an employee’s pensionable salary is ₹15,000 and he has worked for 35 years:
Monthly pension = (₹15,000 × 35) / 70 = ₹7,500 per month

Minimum and Maximum Pension:
Under current rules, the minimum monthly pension in EPS is fixed at ₹1,000. Whereas, the maximum monthly pension that can be received is up to ₹7,500, as can be seen in the above example, this is possible when the pensionable salary is in the range of ₹15,000 and there is 35 years of service.

Possibility of increase in minimum pension:
According to several reports, there is a proposal to increase the minimum EPS pension from ₹ 1,000 to ₹ 7,500 per month in 2025. This step is being taken to increase the financial security of retired employees in view of inflation and rising costs. Dearness Allowance (DA) will also be included in this, which will link it to inflation. However, the final decision on this is to be taken in the meeting of the Central Board of Trustees (CBT).

Higher pension option:
After an important decision of the Supreme Court, employees are now allowed to opt for higher pension on actual salary (without the limit of ₹15,000). If you or your employer have contributed to EPS on salary exceeding the limit of ₹15,000 and you had applied within the stipulated time limit, your pension will be calculated on the actual average salary, which may result in a higher monthly pension.

Some other important points:

• If you have worked for less than 10 years, you will not be eligible for pension. You can withdraw your EPS amount in lump sum.
• You may have multiple EPS accounts when you change jobs, but upon retirement you will get only one pension combined.
• EPS is funded primarily by your employer’s contributions.
• To get accurate information about your estimated pension, you can use the EPS Pension Calculator available on the official website of EPFO.

This ensures that you get a stable financial security after retirement, which can be combined with other savings and investment plans to build a better future.