The last day to apply for a higher pension under the Employees’ Pension Scheme (EPS) is July 11, i.e. Tuesday. With only five days left now, subscribers should complete the process as soon as possible. It must be noted that this deadline has been extended thrice and another extension is unlikely. The deadline was first extended from March 3, 2023, to May 3, 2023. The second extension moved the deadline to June 26, 2023 and then to the current July 11, 2023.
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About EPF high pension
Earlier this year, Employees’ Provident Fund Organisation (EPFO) issued guidelines to allow a section of its older members to opt for a higher pension under the Employees’ Pension Scheme (EPS). The EPFO’s guidelines were issued in compliance with the Supreme Court's November 4, 2022, order.
With this, eligible members have the option to go for higher contributions towards EPS, which is currently capped at 8.33 percent of the maximum Rs 15,000 pensionable salary. In the new window, users have the option to let employers deduct a sum equal to 8.33 percent of the actual basic salary towards the EPS pension.
This means that employee and employer can sign up together, requesting the EPFO to deduct 8.33 percent of the higher monthly basic salary, thus ensuring a larger accumulation towards pension over their work life.
Eligibility
According to the EPFO circular, the following employees along with their employers can submit the joint option to the concerned regional office
Process to apply
The eligible subscribers can apply jointly with their employer for the enhanced benefit in the application form prescribed by the commissioner and all other required documents, like joint declaration and so on.
How to calculate high pension on actual salary
As per the EPFO circular, the formula for calculating higher pension will be different for those retiring before September 1, 2014, and for those retiring after this date.
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). For those who retired 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, pension is calculated as being equal to pensionable salary (average of last 60 months’ salary) x number of years of contribution/70, according to EPF.
The EPFO has also released an Excel utility-based calculator to estimate dues that one must pay from their EPF balance or their own savings if necessary.
How to download EPFO’s Excel calculator for higher pension
Employees must know their EPF plan enrolment date in order to use this calculator. If they had joined the EPF system later than November 1995, the employee must enter the wage amount starting on that date. Then they should click on ‘Pension on Higher Salary: Exercise of Joint Option under Para 11(3) and Para 11(4) of EPS 1995 on or before July 11, 2023.’ Further, the member should click on ‘calculator’ for estimating due for pension on higher wages. Then, one can read the disclaimer and click on ‘download calculator.’
Who should opt
It must be understood that the benefit of the higher pension will not be the same for all EPS members. According to experts, employees should consider their retirement objectives and financial requirements before opting for a higher pension.
It must be understood that opting for a higher pension may not be such a good option for those who intended to plan retirement early since the individual can only opt for EPS after completing 10 years of service and 58 years of age.
