good news for private employees
EPFO Has Brought Good News : EPFO has brought a new update. In a clarification, it has been said that a provision related to Higher Pension. Which allowed some employees to contribute to their pension on the basis of their actual basic salary and dearness allowance (DA), has been reinstated. With the reinstatement of this facility, employees can now choose the option of contributing higher pension on the basis of their actual salary. So let’s know how it will work and which employees will benefit.
Before September 1, 2024, employees had the option to increase their pension based on their basic salary. This was particularly beneficial for PSU employees. But after the salary cap was imposed, this Higher Pension option was discontinued. It is being said that the Higher Pensionable Salary has been fixed at Rs 15,000 on the basis of EPS calculation, which is a major reason for granting pension on this basis.
Simply put, as per the current limits implemented in 2014, the minimum EPS monthly pension is Rs 1,000 and the maximum pensionable salary is Rs 15,000 (basic salary + DA). This limits the maximum possible EPS monthly pension to Rs 7,500. Employees recruited after 2014 or whose salary exceeds this limit cannot base their pension contribution on their actual basic salary. As per the current EPFO rules, both the employee and the employer contribute 12% of their basic salary and DA to their EPF account. Out of this, 8.33% of the employer’s contribution goes to the Employees’ Pension Scheme (EPS) while 3.67% is deposited in the PF account. The money deposited in EPS is received as monthly pension by the employee after retirement.
Available only to those employees who opted for the Higher Pension option before the revision on September 1, 2014. This means it is not applicable to all EPFO members.
