What is epf higher pension scheme

The Employees’ Provident Fund Organisation (EPFO) has announced the method of computing pension on higher salary, instead of the statutory limits. This will be applicable to those who opt for a higher pension on actual salary instead of the statutory limit of Rs 15,000 under the Employees Pension Scheme (EPS), 1995. The higher pension will be approved after EPFO’s field officers verify the details submitted jointly by employers and employees. For those who retired before September 1, 2014, the pension will be calculated on the basis of average monthly pay drawn 12 months prior to retirement (or exit from the pension fund). In the case of those who retired or will retire post this date, the pension will be calculated on the basis of average monthly pay during the 60 months immediately preceding the retirement. At present, it is calculated as pension = pensionable salary (average of last 60 months’ salary) x number of years of contribution / 70. Also read: Applying for higher EPFO pension? Key factors you must consider June 26, the deadline for filing joint applications The Supreme Court in its order in November 2022 directing the retirement funds body to enable higher pension option had allowed it to retain the right to revise the formula to compute pension. For employees, the deadline for choosing the higher pension option under the Employees’ Pension Scheme (EPS) 1995 is June 26, which was extended from May 3 earlier. It will then have to be validated by the employer, fol...

What was the Supreme Court ruling on the Employee Pension Scheme (EPS) all about? As an employee, you’d know that 12 per cent of your basic pay (plus permanent components such as DA) is deducted every month towards a contribution to the Employees Provident Fund or EPF. This is matched by your employer, an annual interest is declared, and a lumpsum is paid to you at retirement. While your 12 per cent contribution goes entirely into your EPF account, 8.33 per cent of the employer’s contribution, in some cases, goes into the Employee’s Pension Scheme or EPS, a separate scheme for guaranteed pension payouts after retirement. On September 1, 2014, the government brought in some amendments. It said that the EPS contribution of 8.33 per cent would be calculated on a maximum salary of ₹15,000. Until then, the salary cap was ₹6,500, but employers could make higher contributions based on actual pay. It also said that employees earning over ₹15,000/month and joining after September 1, 2014, could no longer avail of EPS. Employees unions, finding these changes unpalatable, filed cases against the EPFO in High Courts and won. The EPFO appealed in the Supreme Court (SC), which passed its final ruling in November 2022. What did the SC say? The SC ruling said the Centre had a right to restrict EPS benefits only to employees earning up to ₹15,000/month, from September 1, 2014. But it also held older employees who had been members of the EPF before September 1, 2014, and were still working,...

EPFO higher pension guidelines: The Employees’ Provident Fund Organisation (EPFO) has announced a new window for subscribers who couldn’t opt for higher pensions earlier. The EPFO’s new guidelines come just two weeks before the end of the four-month deadline set up by the Supreme Court to enable eligible subscribers to opt for higher pensions under EPS. What’s new? The employees now have the option to go for higher contributions towards EPS, which is currently capped at 8.33% of the maximum Rs 15,000 pensionable salary. In the new window, employees will have the option to let their employers deduct a sum equal to 8.33% of the actual basic salary towards the EPS pension. Mutual Funds vs Real Estate: Which is better for long-term investors? Also Read: What’s the issue? The Central Government raised the pensionable salary cap under EPS to Rs 15,000 from Rs 6500 through an amendment in 2014. As per the changed rules, employers and members were required to contribute 8.33% of the actual salaries towards the scheme if it exceeded the cap. The EPFO then provided all EPS members with a six-month window to opt for the amended scheme for higher pension. However, several subscribers missed this opportunity. Hence, a new window has been provided based on a Supreme Court judgement in November last. “…all the employees who did not exercise option but were entitled to do so but could not due to the interpretation on cut-off date by the authorities ought to be given a further chance to ex...

Table of Contents • • • • • • • • • EPF higher pension scheme The pension scheme was introduced by the government in 1995 under Section 6A of the EPF Act. As per the Employees’ Pension Scheme, 1995 (EPS-95), the employer’s contribution of 8.33% must be towards the pension scheme. The maximum monthly pension was capped at Rs 5,000, or Rs 6,000. Hence, employer’s contribution must be 8.33% of Rs 5,000, which has been increased to Rs 6,500, towards the EPS pension scheme. In March 1996, a provision was included in para 11 (3) of the EPS-95, which allowed the employer and employee to contribute 8.33% of actual salary, which is above the limit of Rs 5,000 or Rs 6,500, to the pension scheme. The higher salary would be considered a pensionable salary. The employees were given six months by the EPFO to file a joint option form for higher pension contributions to the scheme. As per the amendment made by the government to the EPS-95 scheme in September 2014, the maximum pensionable amount was increased to Rs 15,000. Hence, employers are eligible to contribute 8.33% on a maximum of Rs 15,000 for those joining the EPF scheme after September 1, 2014, even if they draw a higher salary. However, members who were part of EPS-95 or joined before September 1, 2014, are allowed to contribute 8.33% to the scheme on their actual salary (as against the cap of Rs 15,000) if they applied for a new joint option with the EPFO within six months, that is, February 28, 2015. See also: Employee Pension...

By India Today Information Desk: The Employees Provident Fund Organisation (EPFO) has announced a new set of guidelines for employees who want to increase their pension. There is a new window that was earlier not accessible to the individuals who wanted to receive a higher scale of pension. The EPFO's new instructions come only two weeks before the Supreme Court's four-month deadline for eligible subscribers to opt for higher pensions under EPS. EPF HIGHER PENSION: NEW GUIDELINES • A disclaimer should be included in the joint option/higher pension claim application. • On the joint option/application form, an employee must give his/her consent to a share adjustment from PF to EPS and a re-deposit of the amount. • An employee must provide a trustee's commitment for a share transfer of money from an exempted PF trust to the EPFO pension fund. The undertaking shall be valid for the timely deposit of due contribution and interest up to the payment date. • For workers of unexempted businesses, the employer's contribution share refund shall be deposited at the interest rate declared in Paragraph 60 of the EPF Plan, 1952. EPF HIGHER PENSION: DOCUMENTS REQUIRED The following papers should be supplied with the higher pension claim application: • Evidence of a joint option is verified by the employer and filed in accordance with Section 26(6) of the EPF programme. • Evidence of joint option certified by the employer is submitted in accordance with Paragraph 11(3). • Evidence of EPS c...