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EPFO Higher Pension Calculation 2023

EPFO Higher Pension Calculation 2023


Employees, who have been EPF members before 1st September 2014, will get an option to contribute 8.33% of their actual Basic+DA payments towards EPS.

PF Member will soon have the opportunity to pay 8.33% of basic salary and dearness allowance (if applicable) to the Employee Pension Scheme (EPS) if joined the EPF before to 1 September 2014. Soon, further information about this choice and an online form to request a higher pension is now available on the website of the Employees Provident Fund Organization (EPFO).​

The maximum amount that a Member can currently contribute to EPF account is 12% of Basic Salary plus Dearness Allowance. The employer makes an equal 12% contribution, of which 8.33% goes to EPS and 3.67% goes to the employee's EPF account. The statutory wage ceiling of INR. 15,000/- determines the employer's 8.33% contribution, thus only INR. 1,250/- (8.33% of INR. 15,000) is deposited into EPS account each month.
Members who have been EPF members since before 1 September 2014 would have the opportunity to contribute 8.33% of their actual Basic + DA salaries to EPS in compliance with a Supreme Court decision. To demonstrate how much more pension, member can receive by choosing the EPFO higher pension option, the following examples are provided.

Example: If Basic Pay is INR. 40,000/-

Current Scenario: Every month, 12% of Basic Pay (INR. 4,800/-) is transferred to EPF account. EPS receives INR. 1,250/- of the employer's contribution, which is also equal to 12% of basic salary, and EPF account receives the remaining INR. 3,550/-.

Changes for the higher pension: According to the Supreme Court, employees will have the option of choosing a higher EPS contribution depending on their actual income, therefore 8.33% of  basic pay, or INR. 3,332/-, can be allocated to EPS. There is a catch, though.

The EPFO will subsequently take the amount from PF account towards EPS from joining date or November 1, 1995, whichever is later, if chose for the higher pension option.

Pension Amount: The EPS pension is calculated using the formula (Pensionable Salary X Pensionable Service)/70.

If not opted for the higher pension: The average pensionable salary at the time of retirement over the previous 60 months is used to compute the EPS pension. For instance, if member started working for EPS at age 25 and retired at age 58, Member may receive a monthly pension of INR. 7,071/- [(INR. 15,00,033)/70].

If opted for the higher pension: If member chose the higher pension, the pension that will be given when member retires will be determined using actual Basic Salary plus Dearness Allowance (if applicable). For instance, the pension would be INR. 18,857 [(Rs 4000033)/70] if average pensionable pay (Basic + DA) during the previous 60 months was INR. 40,000/- at the time of retirement.

Member may be eligible for a pension of INR. 37,714 [(INR. 8000033)/70] if pensionable salary is INR. 80,000.
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