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Monthly pension: The Employees Provident Fund Organization (EPFO) offers its members a pension scheme under the Employees’ Pension Scheme (EPS). Each member can get a monthly pension of Rs 10,000. Today, we will explain how you can be eligible for a monthly pension of Rs 10,000 if your current basic salary is Rs 15,000. Notably, to become eligible for pension under EPFO, a person must contribute to the scheme for a minimum of 10 years. Pension under EPS starts at the age of 58.
Govt planning to increase basic pay limit
Recently, Union Labor Minister Mansukh L Mandaviya had indicated that in view of rising inflation, the government can increase the basic pay limit under EPFO from Rs 15,000 to Rs 21,000. This increase is expected from 2025. Let us understand with an example how an employee can get a pension of Rs 10,000.
Let us take the example of Mohan, who joined a company in January 2015. At that time of joining his basic pay was Rs 15,000. Now it is expected that the basic pay limit will be revised in January 2025. Then the basic pay limit will increase to 21,000. Mohan will retire in 2049 after working for 35 years. Now let us know from the EPF formula how to get a 10,000 monthly pension.
Formula to calculate EPS pension
EPS = Average Pensionable Salary x Pensionable Service/70
First part of Mohan’s service: January 2015 to December 2024 (10 years), Basic Pay Limit: Rs 15,000
Second part of Mohan’s service: January 2025 to December 2049 (25 years), Basic Pay Limit: Rs 21,000
Part-1: (Pension calculation for 10 years)
Average Pensionable Salary: Rs 15,000
Pensionable Service: 10 years
Pension = Rs 15,000×10/70 = Rs 2,142.86 per month
Part-2: (Pension calculation for 25 years)
Average Pensionable Salary: Rs 21,000
Pensionable Service: 25 years
Pension = Rs 21,000×25/70 = Rs 7,500 per month
Total pension after 35 years of service = Rs 2,142.86 + Rs 7,500 = Rs 9,642.86 per month. In this way, Mohan will receive a pension of about Rs 10,000 per month on retirement.
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