The hearing in the Supreme Court has started from today regarding the removal of the cap on investment under the Employee Pension Scheme (EPS). Now this hearing will be held on a daily basis. Presently the maximum pensionable salary is limited to Rs 15,000 per month. The matter regarding the removal of this limit is pending in court.
On August 12, the Supreme Court had adjourned the hearing of a batch of petitions filed by the Union of India and the Employees' Provident Fund Organization (EPFO), which contended that the pension of employees cannot be capped at Rs 15,000. At the same time, it was decided to hear the matters related to it daily from 17 August 2021.
When an employee becomes a member of EPF ie Employee Provident Fund, he also becomes a member of EPS. The employee contributes 12% of his salary to the EPF and the same amount is also given by the employer. But, a part of the employer's contribution is deposited in the EPS.
The contribution to the EPS account is 8.33% of the salary. However, at present, the pensionable salary is considered to be a maximum of Rs 15 thousand only. With this, this pension share is a maximum of 1250 per month.
Pankaj Mathpal says that now if the cap of Rs 15,000 is removed from the pensionable salary, then the employee can get more than Rs 7,500 pension. But, for this, the contribution of the employer to the EPS will also have to be more.
In government companies, it can be beneficial, but in private sector companies, the appointment of employees is done on the basis of CTC i.e. cost to the company. And in such a situation, if the employer contributes more to the EPS, then the contribution to the EPF will be less or else the net salary in the hands of the employee will be reduced. Whatever be the case, if I get more pension after retirement, then according to me it is good.
The formula for Calculation of Monthly Pension = (Average Salary X Pensionable Service)/70
Here the average salary i.e. Basic Salary + DA means the average of the salary of the last 5 years before leaving the job. Pensionable service i.e. period spent in service. Keep in mind that the maximum pensionable salary limit under EPS is up to Rs 15,000 per month. That is, the pension will be deducted on the same basic + DA amount, no matter how high the salary of the employee may be.
That is, if someone's monthly average salary (average of last 5 years' salary) is Rs 15,000 and the duration of the job is 30 years, then he will get a pension of only Rs 6,828 per month.
If the limit of 15 thousand is removed and your salary is 30 thousand then the pension you will get according to the formula will be this.
(30,000 X 30)/70 = 12,857
That is, if someone's monthly average salary (average of last 5 years' salary) is 30 thousand rupees and the duration of the job is 30 years, then he will get a pension of only Rs 6,828 per month.
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