INSUBCONTINENT EXCLUSIVE:
Today, that is June 26, is the last day to apply for a higher pension under the Employees' Pension Scheme
Since the Supreme Court of India ruling on the higher pension topic on 4 November 2022, there have been multiple circulars and notifications
issued by the EPFO and the Ministry of Labour and Employment
Through notifications dated 3 May 2023, the Ministry has invoked the Code on Social Security, 2020 to require additional allocation of
On 11 May 2023, the EPFO issued detailed guidelines on the methodology for transfer/deposit of past contributions along with interest to the
Pension scheme.On 1 June 2023, the EPFO clarified the method of computation of pension on higher wages as per the Pension scheme
Please note that there is no additional cost for the employer or the employee under the higher pension option
One should also remember that while under the Pension Scheme an employee is eligible for monthly pension post attaining 58 years of age,
under the Provident Fund Scheme, an employee is eligible for lump sum withdrawal on retirement or on specified events.EPS Higher Pension:
EPF vs Employee Pension Scheme - What To Opt For | EPS Calculation(The above video was released before the EPFO released the formula for
However, it provides a detailed and simple explanation on the topic of higher pension versus PF outgo)What is the benefit of a higher
pension option?Under the Pension Scheme, if an employee has rendered eligible service for 10 years or more, the employee is eligible for
monthly pension after attaining 58 years of age
The formula for calculation of monthly pension is (pensionable salary X pensionable service) / 70.Pensionable service is the period of
service period (20 years before and 15 years after September 2014), the monthly pension is likely to be Rs 5,071
monthly pension is likely to be Rs 50,000
This will start once the employee has attained 58 years of age and will continue till the death of the employee
After an employee's death, the spouse will get 50% of this as the monthly widow pension and up to 2 children below 25 years of age will
get 25% of widow pension as the monthly children pension (75% of widow pension per child if no widow pension is paid).How much contributions
are allocated from Provident Fund Scheme to Pension Scheme?If an employee opts for higher pension, almost 9.49% of basic salary will be
allocated from the employer's share of contributions towards the Pension scheme.Out of this, 8.33% of basic salary for every month will be
reallocated from the date the employee started contributing towards the Provident Fund Scheme on the basic salary exceeding the statutory
ceiling till the date of exit
Additionally, 1.16% of basic salary exceeding the statutory ceiling for every month will be reallocated from 1 September 2014 till the date
the Pension Scheme and balance Rs 22,750 is allocated to the Provident Fund
However, if the employee opts for higher pension, Rs
9,316 is allocated to the Pension Scheme and balance Rs 14,684 is allocated to the Provident Fund every month.Who is eligible for a higher
pension option?A current employee of any organisation who joined employment for the first time before 1 September 2014 is eligible for a
Also, any employee who retired from the organisation on or after 1 September 2014 provided he/she joined employment for the first time
before 1 September 2014 is eligible for higher pension option
In both cases, the employee should not have opted for a higher pension in the past and is contributing to the Provident Fund on a salary
exceeding Rs 15,000 per month.An employee who retired from the organisation before 1 September 2014 is eligible for higher pension option
only if he / she had exercised such option prior to 1 September 2014 but such option was rejected by the Provident Fund authorities.Who is
not eligible for a higher pension option?An employee who joined employment for the first time after 1 September 2014 or who retired before 1
September 2014 is not eligible for a higher pension option.How to apply for a higher pension option?The employee needs to file an online
application on the EPFO portal providing specific details in respect of past membership under the Pension Scheme
Employees are also required to attach a copy of Provident Fund passbook and an undertaking that he / she will deposit contributions along
with interest for the past period in case there is insufficient balance in Provident Fund.Once the application is submitted by the employee,
the employer will need to verify and approve the application
Employers are also required to provide details of wages paid to employees during each month the individual was employed with the
consent for diversion of funds from Provident Fund to the Pension Scheme
In case of insufficient balance in the Provident Fund of an employee, the employee will be required to deposit funds with the EPFO from the
bank account available in the EPFO records
Such deposit may be made online if such facility is provided by the EPFO or by way of cheque
Anything an employee should keep in mind?Employees should remember that by opting for higher pension, lump sum withdrawal under Provident
Fund will go down and monthly pension under the Pension Scheme will increase
However, under the Pension Scheme, only a monthly pension is available to the employee, his / her spouse and children less than 25 years of
